Ohio chain of Medical Marijuana dispensaries owes more than $19M in defaulted loans and lawsuit alleges
A medical marijuana operator headquartered in Florida has sued an Ohio cultivator and chain of dispensaries over what it alleges is more than $19 million in defaulted loans.
Trulieve, through its subsidiary Harvest Health and Recreation, filed the lawsuit Thursday in Franklin County Common Pleas Court against Harvest of Ohio. Harvest of Ohio maintains three dispensaries — in Columbus, Athens and Beavercreek — and a cultivation facility in Ironton.
The complaint revolves around loans taken out by Harvest of Ohio, which now total close to $19.5 million with an additional $4.3 million in interest. Trulieve alleges that Harvest of Ohio has yet to repay “even a single dollar” of the advances and instead asked for 16 deadline extensions.
“Trulieve is owed $23.8 million and we will now exercise our right to collect it,” a Trulieve spokesperson said in a statement.
From 2020 through 2021, Harvest of Ohio routinely borrowed from Harvest Health “in an industry where financing is difficult to obtain,” according to the lawsuit — and those loans carried lower industry rates than cannabis industry standards. The Ohio chain’s branding also comes from Harvest Health, which was acquired by Trulieve in 2021.
The Ohio medical marijuana business continued to request additional funding even after it exhausted lines of credit, which is shown in emails included in the filing.
“We had a call with our Harvest Grows team members today, and they are definitely glass half-full individuals, but they are at their near-breaking point in terms of what they still need from us to be successful,” read one funding request email from Harvest of Ohio’s chief operating officer, dated Dec. 14, 2021.
The loans, according to the complaint, went toward financing almost all of Harvest of Ohio’s ventures from construction, to rent, to payroll, to licensing and permitting fees. The lawsuit goes on to accuse Harvest of Ohio executives of using some lent money to pay for “six-figure salaries.”
The day before Trulieve filed the lawsuit, it celebrated opening its first Ohio dispensary facility in Columbus, which is a 20-minute drive north of Harvest’s dispensary on High Street.
“The actions of HHR (Harvest Health) and now Trulieve are undermining their pledge to DEI in a bid to gain control of the businesses built by women and people of color, kicking them to the curb,” an email statement from a Harvest of Ohio spokesperson read.
Founder and majority owner Ariane Kirkpatrick is Black, and when Harvest received its initial permits, the state required 15% of medical cannabis licenses to go to members of economically disadvantaged communities. That law has since been ruled unconstitutional.
The spokesperson, in a statement, also accused Harvest Health of interfering with management decisions and sticking Harvest of Ohio with “inappropriate charges.”
Trulieve’s lawsuit also alleged that Harvest of Ohio has not followed financial responsibility requirements set forth by state regulators, putting its licensing at risk.
But a spokesperson for the State of Ohio Board of Pharmacy, which plays a role in regulating medical marijuana in Ohio, said that it hasn’t taken any action against Harvest’s licensure.
The pharmacy board did enter into a settlement agreement with Harvest of Ohio in 2020, in which Harvest of Ohio agreed to donate $500,000 to the state’s drug abuse database fund after the state alleged it improperly received its original license based on its majority-minority owner structure.