Original Leaf owners say they were forced to hire unqualified workers
The owners of an Aspen cannabis shop are countersuing two Texas investment firms, alleging that while the companies lent Original Leaf $2 million, the firms’ principals controlled the money and forced the shop to hire unqualified employees — one of whom tried to sabotage its marijuana crop.
Original Leaf’s parent company, Colorado Medical Marijuana Supply (CMMS), on Friday filed its answer to the lawsuit by Stillhouse Investments and Willin Group, along with counterclaims. The Austin-based limited liability companies in November sued CMMS and owners Jesse Miller and Cloud Shadowshot, who operate Original Leaf dispensary in the North of Nell building.
The lawsuit says that in February 2015, CMMS signed a promissory note payable to Stillhouse for $743,000; the amount was upped to $799,060 in August 2015. Between March and September of last year, Willin Group and CMMS executed promissory notes totaling $628,000, according to the lawsuit. That was followed by further promissory notes that ranged from $22,000 to $200,000, totaling just over $2 million, the filing says.
“Shadowshot and Miller executed a personal guarantee of CMMS’ performance on” the promissory notes, wrote the plaintiffs’ attorney, Irvin Borenstein of Centennial.
The CMMS owners have failed to repay any of the promissory notes, and Stillhouse Investments and Willin Group are seeking a monetary judgment, plus 18 percent interest a year.
Both companies are tied to an Austin attorney who acts as their registered agent. The lawyer, Lane Prickett, has experience in commercial real estate, according to his firm’s website, while Willin Group touts itself as a consulting firm that specializes in the liquor and retail industries.
In the answer to the lawsuit, CMMS admits that it has failed to repay what is owed on the notes. But it denies that the entire unpaid balance is immediately due.
Shadowshot and Miller took on the debt in order to capitalize their business, but Stillhouse Investments and Willin Group did not actually give them the money. They instead told the defendants that as “expert business consultants,” they would spend the funds on behalf of CMMS, the counterclaim filing says, adding that the plaintiffs “released and/or waived their claim against the defendants by violating their fiduciary duties …”
A condition of the promissory notes was that Stillhouse Investments and Willin Group would have “certain controls over both the loaned money and the defendants’ business,” wrote CMMS’ attorney, Robert Burk of Denver.
The plaintiffs controlled the money “at all times” and subsequently spent hundreds of thousands of the loaned funds on goods and services that benefited Stillhouse and Willin, not Miller and Shadowshot, the counterclaim filing says.
“Plaintiffs also repeatedly demanded and forced the defendants to employ persons known only to the plaintiffs, whose assistance was unnecessary and surplus to the running of CMMS as a business, a fact that defendants Shadowshot and Miller communicated to the plaintiffs multiple times,” Burk wrote.
Those people were unqualified to work for CMMS and were paid by Stillhouse and Willin with the money supposedly lent to the defendants, the filing says.
“In one instance, the plaintiffs forced the defendants to hire an employee who attempted to sabotage [CMMS’] cannabis crop, thereby causing the defendants substantial loss,” Burk wrote.
CMMS denies that Stillhouse and Willin suffered any damages, but if they did, it was because of the potential sabotage of the marijuana crop, he wrote.
Burk declined comment Wednesday on what the employee allegedly did to the plants, and instead released a prepared statement: “We are hoping to resolve any differences with the Stillhouse/Willin Group quickly and amicably. In the meantime, we will continue our mission of providing quality service and products to our customers.”
The plaintiffs’ lawyer did not return a message seeking comment on the counterclaim filing.
The defendants are seeking a jury trial on the counterclaims, which include breach of contract.