Glass House Brands, a California-based cannabis company, has been accused of being “one of the largest, if not the largest, black marketers of cannabis in the State of California, if not the country,” according to a lawsuit filed by one of the company’s retail competitors, Catalyst.
Driving the news: The lawsuit alleges that Glass House Brands has been shipping cannabis across state lines on airplanes and relying on both legal and “burner” distributors to channel legally produced cannabis to the underground market nationwide, effectively propping up its balance sheet.
- By selling into the illegal market, Glass House Brands is undercutting the legal market and those trying to operate by the book, according to the lawsuit.
- The lawsuit claims that Glass House Brands’ illegal activities have allowed the company to “cook the books” and make its operations look better than they actually are, obtain substantial investment and financing, and grow in competitive strength and market power, something legal cultivators are unable to do.
- The suit further alleges that publicly available information can be used to prove Glass House’s culpability and charged that in the fourth quarter of 2022 alone that “upwards of 75% of GHB’s Q4 2022 sales were outside the legal market.”
- The lawsuit was filed in Los Angeles County Superior Court on June 6 and has not yet been scheduled for any hearings.
- Glass House Farms acquired Natural Healing Centers in 2022, operating in Lemoore, Turlock, Morro Bay, and Groover Beach.
What they’re saying: Catalyst CEO Elliot Lewis took Glass House Brands to task on social media last month and made many of the same allegations in a video.
- Catalyst has tried taking on the issue of burner distribution in the past with a lawsuit against the State of California in 2021, and though the case was dismissed, the new suit against Glass House Brands refers to it as currently on appeal.
- “Enough is enough. Via this action, Catalyst seeks to put an end to GHB’s illegal, fraudulent and unfair business practices, and hopefully help bring about what actually was envisioned when California first legalized cannabis – a regulated market where black marketeers do not reign supreme.”