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Central Coast cannabis business files countersuit against competitor

June 27, 2023

Graham Farrar

By KAREN VELIE

Central Coast-based Glass House Brands and owners Kyle Kazan and Graham Farrar of Santa Barbara filed a defamation lawsuit last week against a competitor who sued Glass House for the alleged illegal trafficking of cannabis.

Two weeks earlier, cannabis retailer Catalyst filed a lawsuit against Glass House for harming the legal market through alleged illegal activities. The suit accuses Glass House of selling approximately 75% of the cannabis it produces on the black market through a pot distributor.

In the defamation suit, Farrar and Kazan argue they have no knowledge of any of their distributors selling cannabis on the black market.

“This is a suit between competitors arising out of Catalyst’s outrageous, baseless, defamatory statements falsely accusing plaintiffs of illegally diverting and distributing cannabis and cannabis products throughout California and the United States,” Glass House says in its defamation suit. “Defendants launched their egregious attack on plaintiffs based on misplaced anger and hostility.”

Amid an overproduction of cannabis products, a down economy and high taxes, only 24% of cannabis businesses nationwide are currently turning a profit, according to a report by Whitney Economics. Just a year ago, 64.4% of pot businesses were operating in the black.

Glass House is the parent company of multiple cannabis grows and 10 retail shops in California. On the Central Coast, Glass House operates Farmacy cannabis stores in Santa Barbara, Goleta and Santa Ynez. Glass House also owns Natural Healing Center (NHC) pot shops in Morro Bay and Grover Beach.

On the other side, Catalyst operates 18 retail pot shops in California, and no cultivation.

In Jan. 2023, the state began collecting cannabis excise taxes from retail sales, rather than from distributors. Farrar and Kazan argue this change in the rules resulted in lower revenue for cannabis companies that rely entirely on retail sales, such as Catalyst.

“Defendants are masquerading as righteous whistleblowers when, in reality, they are doing nothing more than spreading falsehoods about a direct competitor all for Defendants’ own financial gain, including to entice their investors and lenders to make additional capital investments into Catalyst,” according to the defamation lawsuit.

In response to the defamation suit, Catalyst CEO Elliot Lewis said on social media that Glass House had “opened up the discovery floodgates.”

“Now we got a fucking truck to drive through this discovery,” Lewis said. “We’re going to call witnesses, we’re going to subpoena fucking records. So you’ve opened the door on discovery. We didn’t even survive demurrer on our other complaint. You just opened it wide open.”

Glass House has suffered “significant economic damages” because of Catalyst’s black market allegations, according to the defamation lawsuit.

The suit seeks an injunction requiring Catalyst to remove all false statements from the internet, return of increase profits because of false claims, attorney fees, court costs and damages.


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Debbie Peterson was right about the corruption.


0

I think they have a smoking case, to be followed by a few chuckles and a pizza.


4

As bad as the implementation of legal cannabis has been in San Luis Obispo County has been, with criminals like Adam Hill and Helios Dayspring corrupting the process for retail outlets, the situation in Santa Barbara County is even worse.


During the development of county ordinances affecting the marijuana industry in Santa Barbara County, Supervisor Steve Lavignino lobbied to be one of the two supervisors tasked with developing the plan used to tax pot growers. Lavignino pushed a plan that resulted in dramatic losses of expected tax revenue, the very reason the county used to rationalize allowing the grows in the first place.


Alas, the very week Lavignino and Supervisor Das Williams were writing the ordinances, Lavignino accepted a cash campaign donation to his political election fund. Lavignino never revealed he was taking money from the very industry he was writing regulations about, and this fact was only discovered when investigative journalists associated with the Santa Barbara Independent weekly discovered it on the website of the California Fair Political Practices Commission (CFPPC), where politicians are legally required to report donations.


After the news broke in Santa Barbara, Mr. Lavignino attempted damage control, and denied the obvious relationship between the donation and the regulations he was authoring which would regulate the pot industry, and those regulations ultimately have resulted in millions of dollars saved by pot cultivators, and the taxpayers of SB County have been shorted the same amount.


We must not accept corruption from our local politicians, and Steve Lavignino got caught with his hands in the cookie jar. Additionally, it is not known if Lavignino’s friends or family members are benefitting from the marijuana growers, and any benefits they received are not required to be reported, this level of corruption is unacceptable and must never be tolerated.

Lavignino

After the above facts came to light, Mr. Lavignino announced he will not run for reelection, which is appropriate. What would also be appropriate is for Mr. Lavignino to publicly reveal if his friends and/or family members have benefitted from his scheme, it has cost taxpayers millions of dollars.


9

I would laugh, but they seem so serious. I thought weed mellowed you out….man.


Naw! I’m gonna laugh! “GUFFAW!”


4

All these dudes are harshing my mellow. How about we encourage more people to grow it and give it away. Where is our Johnny Potseed when we need him?


13