MedMen affiliate Captor Capital slammed with fraud lawsuit by California cannabis executive

MedMen affiliate Captor Capital slammed with fraud lawsuit by California cannabis executive

Bethan Rose Jenkins, Cannabis News Writer/Editorial

A Southern California-based cannabis entrepreneur named Matt Longo has initiated a lawsuit against Captor Capital. Longo’s suit claims that the Toronto-based medical and recreational cannabis retailer has committed fraud. The dispensary owner, who says that Captor breached its contract with him, argues that Captor owes him $2.8 million in damages.

The plaintiff’s cannabis retail stores in Santa Ana and West Hollywood have been actively operating under MedMen’s brand name for a number of years. Despite the fact that Captor is headquartered in Toronto, the company – which operates the vast majority of its businesses in California – is a former financial partner of MedMen Enterprises and has subsidiaries in the distribution, manufacturing and retail sectors.

While Captor might have sold its MedMen branded retail operations to MedMen for USD$31,255,353 in February of last year, MedMen is not involved directly in the lawsuit. Nonetheless, Longo maintains that a chunk of the sale money should be in his pocket. The lawsuit that saw the California cannabis executive sue MedMen affiliate Captor was filed on July 2 in Los Angeles County Superior Court. Longo says that Captor is in the wrong for pulling a “bait and switch” tactic on him that meant he never received promised company stock and wages.

Captor lawsuit: Longo says Captor defrauded him in an acquisition deal

MedMen acquired all of the shares of Captor’s wholly-owned subsidiary ICH California Holdings in 2019. Since this time, both shops continue to carry the MedMen brand name. Longo’s suit proclaims that he was pushed out of the company positions between the years 2019 and 2020; before he was paid.

A spokesperson for Los Angeles-based MedMen – which shares trade with Captor under the ticker symbol MMEN on the Canadian Securities Exchange and as MMNFF on the U.S. over-the-counter markets – did not comment on the suit. However, a response to Longo’s suit was released in an official statement by Captor Capital on July 10.

“The company is aware that it has been named in a lawsuit commenced by Matt Longo, but the company has not yet been served with the complaint. This company believes that this lawsuit is without merit and intends to vigorously defend itself against it,” read the investor update from Captor.

Captor lawsuit: How did Captor breach the contract?

Back in 2018, Longo was hired as Director of Manufacturing & Cultivation by Captor Capital. The said position was to extend over five years and compensate Longo to the amount of $7,500 on a monthly basis. Included in the job agreement was a provision that meant Longo’s role in the company could be revoked, without cause, by Captor within a 90-day timeframe. 

The clause specifically stated that he would receive an 18-month severance payment; if job termination were to happen. However, according to Longo, this promise did not transpire into reality and he was left without any compensation for his work. Furthermore, the plaintiff asserts that the agreement was not formally terminated by the company. He also accuses Captor of deceit and breach of oral contracts.

Longo argues that Captor – which trades on the Canadian Securities Exchange under the ticker symbol “CPTR” and on over-the-counter (OTC) markets under the symbol “CPTRF” – deceived him in an acquisition deal for a different company called Mellow Extracts. This company was founded by the plaintiff himself, who affirms that he was expected to receive 3.75 million shares of stock in I-5 Cannabis Holdings — one of many Captor subsidiaries. Those shares would have been valued at around USD$1.5 million, However, only $525,000 worth of stock was awarded to Longo.

The lawsuit continues.