An employee of Verano Holdings allegedly took the marijuana on a commercial flight. At least one company targeted in the suit filed in Colorado denies the claims.
Verano Holdings, a Chicago weed firm worth roughly $3 billion, was sued Monday in federal court as part of a sweeping racketeering complaint that accuses the company of illegally trafficking marijuana from Illinois to Arkansas.
The lawsuit filed in Colorado alleges a complicated conspiracy that allegedly included the company and Harvest Health & Recreation, an Arizona firm that attempted to acquire Verano for $850 million in March 2019.
The plaintiff, Nicholas Nielsen, worked for a cultivation center in Newport, Arkansas, that was owned by Natural State Wellness Enterprises and managed by Harvest as the company worked in lockstep with Verano as the acquisition was pending. The deal fizzled, however.
The suit hinges on Nielsen’s arrest last January in Jonesboro, Arkansas, where police raided his home after uncovering 28 harvested pot plants in his garbage can, the Van Buren County Democrat reported. Nielsen was then arrested and charged after the cops found two more plants inside the home along with other pot products and paraphernalia.
However, the suit claims those plants were actually being cultivated for the Newport greenhouse while it was awaiting approval from state officials.
The cultivation center’s chief grower previously said agents with the Arkansas Alcoholic Beverage Control Division showed up there during the raid and learned plants at the facility came from Nielsen’s home, according to the local news report.
The suit claims the plants at Nielsen’s home were allegedly grown from clippings brought to Arkansas by Michael Frontier, a Verano employee who was indicted in federal court in Chicago in October 2019 for allegedly running an illegal gambling business in an action unrelated to his work in the pot industry.
In April 2019, Frontier — who was still an employee of Verano — was introduced to Nielsen as Harvest’s central regional cultivation manager, the suit states. Two months later, Frontier was allegedly “instructed by his employer” to take young cannabis plants from an unnamed Verano facility in Illinois and transport them to Arkansas.
Frontier allegedly hid four different pot strains in Whole Foods salads and took the weed on a commercial flight from Chicago to Memphis, the suit contends. From there, Frontier allegedly rented a car and drove the marijuana to Nielsen in Arkansas.
In the suit, Nielsen claims Harvest initially told him that it was legal to grow the plants at the makeshift cultivation facility in his home, which the company allegedly financed. But following the raid, the suit notes that Nielsen was fired by Harvest “as a result of his arrest.”
Nielsen now faces felony counts of manufacture of a controlled substance, possession of a controlled substance and possession of drug paraphernalia.
Frontier has not been charged in connection with the allegations, nor has anyone else listed in the lawsuit. Nielsen’s attorney, Matthew Buck, said his client hasn’t reported anyone else to law enforcement, though he said Nielsen “would definitely testify against all of them” in a criminal case.
The suit includes dozens of co-defendants, including Verano CEO George Archos and other company executives. And it also targets individuals tied to Harvest and Natural State Wellness, as well as various investors and a credit union in Colorado accused of laundering money in connection to the alleged trafficking scheme.
All the parties engaged in an illegal interstate drug enterprise in violation of the Racketeer Influenced and Corrupt Organizations Act, the suit claims. The complaint was filed in Nielsen’s home state, where some of the defendants also live and do business.
The suit comes just weeks after Verano began trading publicly in Canada with a valuation of nearly $3 billion, making it one of the biggest weed firms in the U.S.
In a statement, Buck said Verano and its board of directors “wantonly violated Illinois State law, as well as federal law, when they had their employee traffic marijuana from Verano’s cultivation facility to Arkansas.”
“It’s unconscionable that low-level employees take the fall while Verano’s board continues to make money off of their illegal conduct,” Buck said.
Buck said his client intends to ask for more than $6 million from the defendants as a group under RICO, as well as the same amount from each individual defendant.
Harvest: ‘Thinly veiled shakedown’
A spokesman for Verano didn’t respond to a request for comment. Neither did Frontier’s attorney.
In a statement, a spokesman for Harvest claimed the lawsuit is “replete with inaccuracies” and amounts to “nothing more than a thinly veiled shakedown.”
“Knowing his client was legally bound to take any dispute to binding confidential arbitration, Mr. Nielsen’s lawyer threatened to unleash a smear campaign by filing a lawsuit filled with damaging false information unless we paid him millions of dollars,” said spokesman Terry Fahn. “He went so far as to threaten what he believed the headline emanating from the lawsuit would be.”
Fahn noted that Harvest has filed a motion to compel arbitration, adding the company “intends to vigorously defend itself against these claims and expects the case will be dismissed in due course.”