You may have recently heard about Catalyst Cannabis filing suit against Glass House Brands. There has already been a response to that, although not directly addressing the original lawsuit. Rather in the form of a new lawsuit alleging defamation being filed by Glass House Brands against Catalyst.
A Quick Recap
California-based Catalyst Cannabis launched a lawsuit in the Los Angeles County Superior Court against Glass House Brands, Inc. The lawsuit claims that the cannabis company has become one of the largest, if not the largest, black marketers of cannabis in the state.
The allegations stem from an estimation report from Glass House in May predicting an increase in sales of up to $160 million for 2023. This prompted Catalyst CEO Elliot Lewis to take to social media and make similar claims about Glass House being “the biggest black marketeer … in the history of the United States”.
The lawsuit alleges violations of California’s Business & Professions Code. It details how Glass House has intentionally structured its business operations to capitalize on the black market. The lawsuit is seeking to preliminarily and permanently enjoin these activities.
Glass House’s Defamation Lawsuit
Glass House claims that this lawsuit is a dispute arising out of the defendant’s outrageous, baseless and defamatory statements falsely accusing them of illegally diverting and distributing cannabis and cannabis products throughout California and the United States.
The defendants have launched a misguided and systematic derogatory social media campaign falsely accusing Glass House and its cofounders, Kyle Kazan and Graham Farrar, of being “the biggest black marketers in the entirety of American history”, likening them to a Mexican cartel.
The lawsuit counterclaim is that nothing could be further from the truth. That the plaintiffs made these accusations without evidence relying purely on speculation. The defendants then taunted Glass House, saying that their defamatory statements must be true because Glass House has not filed a defamation lawsuit. Enough is enough the lawsuit reads.
The lawsuit goes on to say that Catalyst is defaming them because they are enraged with the current state of the cannabis industry, and that Glass House is competition to Catalyst and lists multiple reasons why, including owning retail dispensaries themselves. Catalyst has no viable defense for their misconduct. Their statements about Glass House are provably false, therefore they cannot rely on the truth as a defense. Catalyst has further attempted to insulate themselves by inserting the word “allegedly” in connection with their statements, but that term does not magically make false, defamatory statements nonactionable.
It appears as though most of the claims of defamation come primarily from social media posts and videos, with the platforms ranging from Twitter to Instagram. The lawsuit outlined in detail an over six-minute Instagram reel where Elliot Lewis uses a whiteboard to show how he claims the sales numbers that Glass House has reported don’t add up. The majority of the print landscape of the lawsuit is taken up by addressing these social media claims instance by instance.
Glass House continues to claim that they pride itself on being a transparent operator who communicates openly with state regulators at the DCC. They also claim adherence to the highest standard of the law and regulation that all of their products, at all of their locations, are all correctly entered into METRC, which is California’s track and trace system for the cannabis industry.
What Will Happen Next?
It’s very difficult to predict where this will lead. To our knowledge, this is one of, if not the first, lawsuits of its kind, so there’s not much precedent to rely on.
There is certainly lots and lots of speculation on social media platforms on what will be happening next. Ranging from people on each side of the argument claiming an easy victory for multiple reasons. To people discussing whether or not this is “whistle-blowing” or “snitching”, as you can imagine those opinions vary wildly.
We have reached out to both parties for comment. As of this time we have only heard back from Elliot Lewis at Catalyst. Read his comments below.
“I am hopeful that Catalyst and Glasshouse finally have some ground to get together on. Pursuant to Glasshouse’s assertion in their lawsuit on page 3 of their complaint they say that they have -taken great strides to make sure its cannabis products are appropriately tracked and traced and don’t end up in the illicit market.”
Lewis continues “With the recent service today of all the discovery for Glass House record today, and tomorrow subpoena to METRC for its record, I hope both parties will strive in a cooperative manner to uncover how much product is in fact leaking onto the black market and how it is ending up there.”
“We assume they will have no reason to object to our subpoena, which will lead to the release of those records if they are sincere in their words both publicly and in their defamation lawsuit. Nothing is more fact finding and sincere of an effort than following the METRC tags. We hope to work in cooperation with Glasshouse on this issue and get all the relevant documents from METRC.
Transparency is the best solution…Any objection in court to this request on their part is a clear blocking of the truth. And let’s really put THE MATH to the test !!!” says Lewis.
“Please see attached the following discovery that South Cord Holdings, LLC (Catalyst) is hereby serving on Glass House Brands in the defamation case:
- First Set of RFAs
- First Set of Requests for Production
- First Set of Form Interrogatories
- First set of Special Interrogatories
- Notice of Deposition of Glass House Custodian of Records, which we set for July 10, 2023″
We wouldn’t be surprised to see the DCC eventually subpoenaed and added to the list of requests for records in discovery.
When we hear back from Glass House, Kyle Kazan, or Graham Farrar, we will update this article.
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