The plaintiffs’ complaint, which has been heavily redacted, states that “… Australis stole … from Plaintiffs under false pretenses, has breached the contracts, and has acted in a manner inconsistent with the implied covenant of good faith and fair dealing.” Alleged damages have exceeded $15,000.
The plaintiffs declined comment to Cannabis Business Times. The defendants could not be reached for comment.
In a press release, Green Therapeutics, a Nevada cultivator, manufacturer and processor, alleges it and Meridian transferred to Australis nearly 9 acres of land in North Las Vegas, in addition to brands, licenses “and other intellectual property, assets, and rights” in exchange for Australis shares “and other promises and rights.” An Australis press release from May 2019 announced the news, citing plans to build a “400,000 square foot cultivation and production facility which will be built to the industry recognized Aurora Cannabis standard.” (Canada-based Aurora has since fallen from grace, with plunging stock, the departure of founder Terry Booth and mass layoffs.)
Green Therapeutics and Meridian state that Australis no longer plans to construct the 400,000-square-foot facility. Instead, it outlined plans to sell the property “and use the proceeds to purchase Passport Technology Inc. (or alternatively transfer the property in connection with such transaction), a company majority owned and controlled by a director of Australis.”
A July 3 Australis press release said: “the Plaintiffs' complaint of breach of contract is without merit and is an opportunistic ploy to reverse two separate and legitimate, closed deals in which Green Therapeutics sold to Australis certain cannabis licenses, brands, and other assets in exchange for common shares of Australis, and Meridian sold to Australis certain real property.
"It is noteworthy that, with respect to the asset purchase agreement, the State of Nevada has placed a moratorium on cannabis license transfers since October of 2019, which has adversely impacted Australis' ability to realize any investment returns and for which Australis has not sought remuneration or relief from Plaintiffs.”
Australis isn’t just facing opposition from Green Therapeutics for its decision to pivot from cannabis cultivation and processing.
In a press release dated June 26, Roger Sykes, “Concerned Shareholder of Australis Capital Inc.,” alleges the purchase would “further dilut[e] the Company's shareholders at a time when the Company's shares are trading at a price that is less than 10% of their price at the time of listing on the Canadian Securities Exchange [in September 2018].” He alleges Scott Dowty, executive chairman of Australis and executive chairman of Passport, stands to gain millions of dollars from the acquisition regardless of if it succeeds, while other shareholders are being asked to pay for the purchase without due explanation.
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