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Lawsuit Against Acreage Holdings Allowed to Move Forward

lawsuit acreage holdings allowed

David Feder and investment group EPMMY will proceed to court with their lawsuit against Canadian cannabis superpower, Acreage Holdings. Acreage, along with 25 other companies, are being accused of involvement in an illegal scheme that deprived EPMMY of 25% interest and a New York State medical marijuana license.

The Lawsuit 101

The latest development in a nearly four-year-old case reports that New York State Supreme Court Judge Andrea Masley heard arguments and evidence in January of this year and determined that plaintiffs could move forward with the $600 million suit. 

The lawsuit claims that EPMMNY played an instrumental role in obtaining the medical marijuana license under which Acreage currently operates. They currently hold one of only ten medical marijuana licenses in the state. These licenses are unique because they are vertically integrated, meaning that Acreage currently owns and controls the cultivation, lab and extraction, manufacturing and retail sectors of one-tenth of New York’s medical marijuana industry.

EPMMNY alleges that defendants violated a contract for the ownership, management, and control of the business license. The 230-page amended complaint filed Oct. 4, 2021 seeks $200 million, plus $400 million in punitive damages and control of the license. 

The lawsuit names several other defendants in the lawsuit as well. Representatives of New Amsterdam Distributors, LLC, New York Canna, Inc., (NYCanna), and the founders of NYCanna. NYCanna was later acquired by Acreage Holdings. 

Acreage Holdings is currently poised to be acquired by Canadian cannabis producer Canopy Growthy, but this lawsuit could be a huge roadblock to the deal. 

Acreage’s Shady History 

This company is no stranger to bad business. Former Speaker of the House John Boehner sits on the board of directors at Acreage, a move intended to help push the legalization of marijuana at a federal level and secure good business for Acreage. Canopy Growth’s acquisition of Acreage is actually conditional on federal legalization, so Boehner seemed to be a useful partner. This move, however, has actually resulted in another, separate lawsuit.

Boehner is currently being sued by a separate party, who alleges that Boehner is using proprietary materials for profit. Business analyst Owen Bennett says that, on the acquisition, “Assuming Acreage can remain a going concern until such time as we reach federal legalization … Canopy faces guaranteed dilution from a business that, given its current problems and huge cost base, is only likely to add to the pressures currently being faced,”

The Precarious Future Of Acreage Holdings 

The original deal between Canopy and Acreage was valued at approximately $3.4 billion, making it the industry’s most expensive merger and acquisition. This new deal, however, values

Acreage’s equity at about $900 million, Cowen analyst Vivien Azer writes.

The new deal includes a $37.5 million cash payment and would split Acreage shares into two classes.

Seventy percent of each existing share would be converted into a fixed share valued at 0.3048 Canopy shares each. 30% of each share would become floating shares that can be exercised by Canopy for at least $6.41 per share. Fixed-value shares will be acquired by Canopy when the deal is triggered and all conditions are met, but they are not required to acquire the floating shares. 

Acreage’s financial troubles are most certainly being exhausted by multiple simultaneous lawsuits. Their golden goose Boehner is failing to work as planned, and Canopy’s significant amendment to their merger are likely significant reasons for the recent resignation of their CEO and major shareholder Kevin Murphy. 


If this company goes under, 1/10th of New York State’s medical marijuana supply, distribution, and retail will completely halt. As New York prepares to launch their projected multi-billion dollar recreational cannabis industry, companies like Acreage stand to gain some extraordinary profits considering their current monopoly on legal growth and distribution. However, in the midst of two separate lawsuits and an increasingly unlikable political pawn, it seems that Acreage may not survive to see recreational cannabis thrive. 

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