The desert town of Blythe in eastern Riverside County Ca wanted in their recent council meeting to pull the cannabis dispensary license HighTimes purchased from Harvest because of abandoned trash on site and months of unpaid rent valued at $US45,000.
The license was granted by the city two years ago to Ryan Kunkel owner of Have A Heart dispensary but according to an internal disclosure document obtained by Cannabis Law Report the rent has not been paid since Harvest bought the Have A Heart dispensary business in spring 2020 and the deal now has near half a million dollars in bills that are overdue.
Instead of building a place for local employment and servicing the medical marijuana community for the economically disadvantaged town that sits on the Arizona border the Have A Heart site has turned into a dumping zone and unauthorized shelter for the homeless.
On August 11 the Blythe city council held an in person hearing demanding the license holders explain why it has taken so long to complete a deal that was supposed to be completed by the end of 2019.
Ryan Kunkel, the original license applicant, and Adam Levin, who bought the license in June, showed up at the meeting to try and save the dispensary deal.
Given that only two dispensary licenses were granted the city council was more than irritated to learn that operations had not yet began because delays had meant a loss in much needed tax revenue for the city, according to town council notes.
Levin the Chairman of High Times, who arrived at the meeting by single engine private plane flown by his brother, also hasn’t paid the $9000 a month rent or the $400,000 overdue construction bill for initial build out.
As a result Kunkel can’t transfer the license over to High Times until a certificate of occupancy is granted and the license, which is temporary, is finalized.
In fact, on August 5th it was Kunkel who was put in the position of having to pay a few thousand dollars for cleanup on the property before the city council meeting in what appears to be a move to keep his good name as a cannabis license holder in multiple states.
In the meeting the council gave the duo until Aug 19th to submit a plan as to how the building will be completed and requested that the back rent and overdue bills must get paid immediately.
The council has scheduled another face to face hearing for August 25 and also made comments that the dispensary has to be fully operating in three months or they would pull the license according to people who had attended the meeting.
Cannabis Law Report reached Adam Levin today who said he plans to pay the back bills in Blythe in an email response.
Levin also made a comment that he doesn’t think they can be evicted from any of the California dispensaries he bought from Harvest because of the eviction moratorium in California that was extended to the end of September.
But emergency orders vary city by city in the state and don’t always apply if a commercial tenant has done something to violate the lease and damage the property.
Levin would not expand on why he hasn’t been paying rent on any of the properties he “bought”. Court records show Levin has a history of making promises to pay but never delivering on the payment. High Times was sued in 2019 by their own attorneys who worked on the purchase of Trans-High the company that owned the High Times magazines. The lawsuit, filed in New York state court in 2019, was for fraud and breach of contract because Adam Levin signed a promissory note to pay near $100k in legal fees to get his case files and then didn’t do it. The court awarded the lawyers at Ansell, Grimm, & Aaron $137k and Levin finally paid up in March 2020. Additionally High Times Productions settled another breach of contract and fraud suit this month after the company refused to return sponsorship money owed to a CBD company called Black Tie Group after High Times canceled its March Cannabis Cup event this year due to Covid19.
Troubled Harvest Health Deal
Harvest Health said this week in their investor call that a total of 8 dispensaries were sold in a closed transaction with High Times.
High Times paid Harvest $1 million in cash and owes a $4.5 million promissory note due next year.
Harvest also received 600,000 High Times prefered shares that pay a 16% dividend, according to the merger agreement reviewed by Cannabis Law Report.
HARVEST INVESTOR CALL SUPPORTING DOCUMENTHarvest-q2.20-Earnings-Slides-FINAL
Previous press reports, including this publication, have reported that the Union Square San Francisco location was put back on the market because of unpaid rent but it was unclear how much was owed. Now according to a new confidential document written by Harvest for Levin and High Times that was obtained by Cannabis Law Report, we know, as of the June 22 closing date of the deal over $1.5 million in back rent was owed on multiple properties and the Union Square location had $920k in rent due. Levin knew this going into the deal.
It is known that there were also multiple landlords who threatened legal action and eviction at the time of the deal closing, including the Oakport location and San Bernardino, and construction companies who had filed UCC liens.
Around two-thirds of the dispensary licenses are contingent on High Times getting the building ready for occupancy and cities can pull temporary licenses if they don’t see progress.
Beginning in April 2020 Levin was touting in press release that the deal they valued at $67.5 million was going to be a tremendous asset for High Times.
Levin has been raising money from main street investors for a mini-IPO but what he hasn’t told investors was that Harvest wasn’t paying the rents and letting the assets deteriorate.
Cannabis Law Report was also first to report that the SEC halted the ability for High Times to take investments in it’s mini-ipo offering because they have not filed the required yearly audited annual report.
Levin told Cannabis Law Report,
“High Times is not perfect but I am more excited than ever about the future of our company.”
Levin also reiterated in our email interview that his company has the money to pay the back rents but as yet has offered no explanation in writing as to why he doesn’t do it?
Blythe Council Meeting8-11-2020 Blythe city council agenda