Three investors are suing a California-based cannabis company and several affiliates, saying they were induced to invest more than $9.1 million in exchange for ownership shares of dispensaries, but have seen little to no return on their investment while their money was diverted.
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In a complaint filed last week, Benjamin Melendez, Ranjeet Pannu and Bikramjit Singh Pannu say they were approached by the officers and executives of Culture Cannabis Club, Skybox Holdings 81, Mammoth Legend Consulting Inc., Bloomstone and Proficient Profits, who offered ownership interest of cannabis dispensaries in exchange for the investments.
According to the complaint, the companies said they would use the funds to secure cannabis licenses from the state of California and build and operate dispensaries in Los Angeles, Orange, Riverside and other locations.
However, after the funds were transferred, the companies provided Melendez and the Pannus with no written agreements or documentation of the ownership interests, and have promised contracts that never materialized. In addition, when asked about the operation of the stores, the companies only gave general responses or limited and misleading information, keeping the plaintiffs in the dark.
The three further allege that early this year, they learned that the funds they invested had been spent, with some of them diverted to apply for licenses in other areas of California or even other states, including Mississippi, New Jersey and Florida.
In addition, the complaint alleges that several of the California locations have never even opened due to "mismanagement and incompetence," including one store that lost a license because a renewal request was not mailed on time, and a store in Barstow that burned down with no sign of being rebuilt.
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