The current owners of the country's first publicly traded medical marijuana business utilized fraud and deception to gain control of the company, a pair of former boardmembers claim in a lawsuit filed last week.
According to a Courthouse News Service report, William Martin and David Tobias say they were approached in May 2010 by Michael Llamas, president of the Hemp Deposit and Distribution Corp., doing business as CannaBank.
Llamas wanted to present an unsolicited offer to acquire control of the San Diego–based company. His offer: ten debt-free properties, along with "various patents, technology, intellectual property, and products," in exchange for 260 million Medical Marijuana, Inc., shares, a controlling interest. Martin and Tobias were also to receive 30 million shares each out of the deal, which they agreed to in 2011.
Once the deal was struck, problems began to arise, according to the suit. The "debt-free" properties were actually tied up in "a storm of litigation," and none of the combined 60 million shares promised to the boardmembers ever materialized.
The company, which has had hands in operations including condensing cannabis into extract for pills and distributing pot-laced candy and sodas, trades as a penny stock under the symbol MJNA. Pricing as of May 6 hovered around 8 cents a share, near the stock's 52-week low. Still, that would value the missing 60 million shares at around $4.8 million.
Martin and Tobias are asking a judge to unwind the agreement with Llamas and CannaBank, award monetary judgment of damages plus interest, and order the transfer of the promised 60 million shares.