Pot Co. Can’t Get Rehearing In License Ownership Dispute
Law360 (September 18, 2020, 9:45 PM EDT) — A Washington state appeals court has declined to reconsider a decision dismissing the bulk of claims in an ownership dispute over a Florida medical marijuana license. The decision Wednesday marks a rebuke to California-based cannabis holding company Left Coast Ventures Inc., which has alleged that it is the holder of a valid option to buy Florida dispensary Bill’s Nursery Inc., owing to a years-old business agreement that fizzled out under Florida’s prior medical cannabis program. Left Coast initiated the lawsuit in July 2019, claiming it had acquired the option years earlier when its assignor, Privateer Holdings Inc., supported Bill’s Nursery in a failed attempt to secure a low-THC dispensary license in 2015. Left Coast alleged that when Bill’s Nursery finally obtained a treatment center license in 2019, under the state’s revamped full-THC medical cannabis regime, it was thanks entirely to the expertise provided years earlier by Privateer while preparing the old applications. However, a trial court judge ruled in favor of Bill’s Nursery, finding that the option agreement became void after the denial of the 2015 application, and accordingly dismissed the lion’s share of Left Coast’s claims with prejudice. In denying a motion for discretionary review, the appellate court disputed Left Coast’s claims that the nursery still had an obligation to keep it in the loop because of “a special relationship of ‘trust and confidence'” stemming from a confidentiality clause in the original agreement. “As Bill’s Nursery points out, Left Coast fails to identify authority to support the proposition that a duty of confidentiality necessarily gives rise to a duty to disclose,” Commissioner Jennifer Koh wrote for the appeals court Wednesday. The appellate court found further that Bill’s Nursery received its 2019 license entirely thanks to a settlement reached with the Florida Department of Health, which favored unsuccessful applicants from prior years, and not because of a new review of the 2015 applications. Given that Bill’s Nursery and Left Coast’s assignor Privateer went their separate ways in 2015, the appellate court found that nothing barred Bill’s Nursery from pursuing future success in the Florida marijuana industry on its own. “It appears likely that the parties intended that Privateer would bear the risk that the [Florida] Department [of Health] would refuse to grant the specific kind of license for which it applied with Bill’s Nursery in 2015 and later Bill’s Nursery would somehow obtain some other kind of license,” the appellate court wrote. Despite dismissing the majority of claims, the trial judge had allowed trade secrecy and unjust enrichment claims against Bill’s Nursery to continue, writing that Left Coast credibly pled that the dispensary could have used trade secrets or expertise acquired in 2015 when it finally secured its license. “It appears that Left Coast’s remaining claims, if proven, have potential for significant damage awards, such that further proceedings would not be useless,” the appellate court said. Counsel for Bill’s Nursery declined to comment. Counsel for Left Coast did not immediately respond to a request for comment. Left Coast is represented by Jordan Clark, John A. Goldmark and Nicole Phillis of Davis Wright Tremaine LLP. Bill’s Nursery and its owner, Stephen Garrison, are represented by Velvel Freedman of Roche Freedman LLP and Emanuel Jacobowitz of Cloutier Arnold Ortega PLLC. The case is Left Coast Ventures Inc. v. Bill’s Nursery Inc., et al., case number 81633-1-I, in the Court of Appeals of the State of Washington. –Editing by Abbie Sarfo.