A prominent cannabis cultivator in Palm Springs has collapsed into a complex web of fraud allegations and lawsuits.
The Kings Garden cultivation facility no longer operates after the breakup of its senior leadership team. The site had been scheduled to expand to over 200,000 square feet, more than five times its original size.
But allegations of financial fraud and extortion have stalled its development, and what was once called California’s predominant cannabis cultivator is now locked in a contentious legal dispute.
Multiple parties involved in the financing, operation and construction of the property have hurled accusations against each other, including the two brothers who helped start the company.
Property owner Innovative Industrial Properties Inc. sued both Kings Garden and a local subcontractor hired to build cannabis cultivation facilities for millions of dollars, alleging its investment funds had been fraudulently spent.
Innovative Industrial Properties, a publicly traded company known as IIP, was also the subject of a class-action lawsuit from investors upset over its oversight of the project.
A judge dismissed the class action case, and IIP settled with Kings Garden, which agreed to pay IIP $8.5 million. But IIP’s lawsuit against the local subcontractor, Palm Desert-based Orr Builders, remains ongoing. In the lawsuit, IIP claims Orr Builders provided inaccurate information about the work that had been done on the property.
This included falsely claiming to have purchased $9.5 million worth of steel while actually only purchasing less than $1 million, according to the lawsuit.
Other allegedly fraudulent expenses totaling millions more are also included in the suit.
“The evidence at trial will show that Orr Builders worked with its subcontractors to intentionally inflate construction invoices and wrongfully presented them to the property owner IIP for payment along with other subcontractor invoices that Orr Builders did not properly verify for accuracy,” Andrew A. Howell, an attorney representing IIP said in an email to The Desert Sun.
Citing an impending trial next month, Orr Builders declined to comment in detail on the lawsuit.
“Orr Builders, a well-respected and local commercial general contractor, has never had any business relationship or dealings with IIP. Recent claims suggesting otherwise are entirely false,” attorney Robert Gilliland said in an email, referring to claims in the lawsuit. “Orr Builders looks forward to its day in court, where we are confident these baseless accusations by IIP will be fully addressed and refuted in their entirety.”
Representatives for Kings Garden did not return a request for comment.
King of Cannabis
Kings Garden first began to operate in Palm Springs in 2017 after it received a permit to convert a 37,787-square-foot building on 19th Avenue previously occupied by FedEx into a cannabis cultivation site.
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