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Marijuana investor moves to seize Massachusetts pot concern he says has stopped making payments on the $19 million he loaned it
By adamg on Fri, 10/06/2023 - 4:55pm
A South Carolina lender focusing on the marijuana industry today asked a judge to let him take control of Middlesex Integrative Medicine, which has a dispensary in Norwood and a growing facility in Leominster, because he says it's no longer paying him back on millions in loans and its Leominster plant is no longer producing enough product to keep the company afloat.
In a suit, filed in Suffolk Superior Court, David Engel of Full Moon Investments in Charleston, SC., asks to be named receiver for Middlesex, to which he says he lent $12.5 million in 2018 and, when it stopped making payments on that, arranged a second loan for $6.5 million.
Now, he says, Middlesex is roughly 18 months behind in making interest payments. And its Leominster plant is producing only 1,750 pounds of pot a year, compared to the minimum of 2,772 a year called for in his loan agreement with the venture - and "significantly below the production levels needed to keep the company in business."
He adds that as of August 4, the company owed National Grid nearly $1 million in unpaid electricity and gas bills for the Leominster facility - and warns that if the utility were to shut off the power:
[T]here would be plant death, total crop failure and mold development within 7 to 14 days which would require a total shutdown for many months, if not a year or more.
He charges the company is also behind in its rent in Norwood and for space in Waltham for which its has regulatory approval to open a recreational-use shop - and owes the state Cannabis Control Commission $100,000 licensing fees and Norwood and Leominster nearly $245,000 in local licensing fees.
He says that to try to make its monthly $230,000 payroll, Middlesex has been selling product at below-market rates - and relying on infusions of cash from its founders.
The court docket does not yet specify the date by which Middlesex has to respond to the suit.
Engel's statement of the case (4.5M PDF).
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Comments
What a mess
What a mess this industry has become. What’s it been… five minutes?
Too many pols in the pot.
It was all friends of friends and former colleagues and cousins. Perhaps even a neighbor or two from the old neighborhood.
Just like the Jakes, Cops, Staties, and T workers.
It's always an inside job.
Fools and their money are soon parted and deservedly so
The irony is that Engel identified the risks and foresaw this issue three years ago. The problem was he was arrogant and thought he would beat the bubble. He thought of himself as "unique."
https://www.openaccessgovernment.org/the-medical-cannabis-space-a-succes...
The Accredited Investors must not be too happy at what looks like a huge loss. Being accredited means you can afford it in theory.
Really I don't think people thought they were voting for this when they voted in the 2016 legalization referendum. I voted for being able to possess a little raw weed, stop city youth from getting records and ending intrusive police actions, being able to grow your own, and buy a brownie made with natural weed.
I didn't expect super strong synthetic concentrates for vaping and jellies and large emporia financialized by private equity and public companies all over the place. Keep an eye on the schizophrenia rate.
We should have legalized only edibles and tinctures...
...and other formulations that have no odor or impact on others.
As the law stands now, it's a predictable joke. Zero enforcement of public consumption restrictions, including motor vehicles. It's literally a Cheech & Chong movie come to life.
Intention vs. reality
The people (and voters) thought their chant of "legalize, regulate and tax" would reap great social benefits, along with the (hoped) reduction of social stigma. Instead, Big Pot and Wall Street investors slid into their DMs, drowning out that chant with "Profit, profit, profit!" instead.
Corrupt legislators and the government waited in the wings to get their piece of the profits, in the form of tax revenue (which, much like tobacco, will go to the general fund, not harm reduction), political campaign donations and kickbacks.
I don't smoke but friends of
I don't smoke but friends of mine who do still just buy weed from their friendly local seller, with no hassle, no taxes. Technically illegal, of course, but no need to worry because of the sorry state of the CCC, which hired a has-been politician as its head, only to see her suspended from the job. Several local politicians have dipped into the pot industry, only to find brutal competition.
By the way, I will be in Manhattan on Thanksgiving weekend. No need to buy any pot, all one has to do is breathe.
https://www.bostonglobe.com/2023/08/22/magazine/pot-prices-have-tanked-d...
Looks like profits have gone up in smoke
Confucius say, “he who smokes weed on toilet, is high on pot.”
Magoo sez
He who go to bed with itchy bum wake up with stinky finger. Magoo.
"Where's the MONEY, Middlesex? Get me my money!"
It's nice that this is being settled in courts rather than via gang warfare.
(Adam, the complaint PDF link doesn't seem to work?)
How the world changes
Back in the day if the local drug dealer didn't pay up,
Nicky the nose would break his leg and take over his businesses by force, no courts needed.
This is more civilized.