Tilray’s application for a scarce, low-THC dispensing license on behalf of Bill’s Nursery scored last in both of the regions it applied, despite the company touting its expertise.
By Michael A. Mora | April 16, 2021
A Miami attorney has a word of warning for new players in the cannabis industry.
Velvel Freedman, a partner at Roche Freedman in Miami and lead attorney for Bill’s Nursery based in Homestead, Florida, argued in a lawsuit pending in a Washington state court that Tilray Inc., a $4.3 billion dollar publicly-traded company represented by an AM Law 200 law firm, pulled a “bait and switch” on his client.
And Freedman said on Friday that the contractual dispute between the two companies is a cautionary tale in the emerging cannabis industry for small companies choosing to team up with some of these relatively new mega-cannabis businesses.
“Don’t bring frivolous litigation if there are skeletons in your closet because discovery is a two-way process,” Freedman alleged. “Tilray’s predecessor’s assignee has expended an outrageous amount of money pursuing meritless claims, most of which have already been thrown out.”
The dispute between the two companies dated back to a contract signed between Bill’s Nursery and Tilray in 2015, to allegedly increase Bill’s Nursery’s chances to obtain one of Florida’s scarce THC Dispensing Organization licenses.
Tilray claimed to have the “best systems, techniques, standard operating procedures and proprietary methods in the cannabis industry,” according to the complaint.
However, the complaint alleged that the Canadian cannabis company pulled a “bait and switch” by filing an application on behalf of Bill’s Nursery “composed of cursory, generic, well-known descriptions.”
The application scored last in both of the regions in which Bill’s Nursery applied for a license, and the Florida Office of Medical Marijuana Use had some choice words about the “quite poor” application containing “generic boilerplate information,” according to court pleadings. Then, the two companies parted ways.
But after four years, three lawsuits, numerous law firms and consultants, and tens of thousands of hours, Bill’s Nursery settled with the Florida Department of Health for a medical marijuana treatment center license.
That motivated a Tilray entity, Left Coast Ventures, to file a lawsuit claiming it should be reimbursed for its work in the license approval. During that litigation, former in-house counsel testified the application was watered down because it could expose “trade secrets” and threaten its competitive advantage over competitors, according to the complaint.
Now, Bill’s Nursery is fighting back, suing the Canadian mega-cannabis company in Washington state court for breach of contract, breach of implied good faith and fair dealing, breach of fiduciary duty, and fraud. Meanwhile, the Left Coast Venture lawsuit is scheduled for trial in August.
John McKay and John A. Goldmark, partners at Davis Wright Tremaine in Seattle, Washington, who represent the two companies, did not respond to repeated requests for comment.
This is not the only lawsuit Tilrey is facing. Tilray recently combined its operations with cannabis giant Aphria Inc. in December 2020 to increase the size of the operation and market share. The embattled company is in hot water with the Securities and Exchange Commission for disclosing the merger on platforms like Twitter and LinkedIn.
Tilray is also facing a series of class action complaints from its shareholders, which lawyers for the company have previously claimed lacked merit.