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A Consultant Takes Privateer Holdings to Court

Jumoke Akinnagbe says she is owed promised compensation for helping a medical cannabis company launch in Maryland.

May 7, 2019 6:55AM EDT Business

Co-founder of Cannabis Wire.

Privateer Holdings, one of the world’s biggest cannabis companies, is being sued by a woman who says that she never received promised compensation after providing consulting on a Maryland medical cannabis business application.

Jumoke Akinnagbe, a cannabis consultant, is suing TilStar, LLC (a licensed Maryland medical cannabis dispensary); Darryl Hill, CEO and chairman of TilStar, LLC; Tilray, LLC (a company formed by Privateer); and Privateer Holdings, Inc. She claims she agreed to do consulting work in exchange for 2% in TilStar shares, according to a complaint filed last week in Prince George’s County Circuit Court. Akinnagbe is seeking $75,000 “plus interests and costs,” for eleven different counts, and 2% in TilStar shares. (Read the full complaint here.)

Privateer, based in Seattle, is perhaps most well known for its subsidiary Tilray, a Canadian cannabis company with a market cap just below $5 billion, and one of the first cannabis companies to move forward with an initial public offering on the NASDAQ.

Akinnagbe is the president and CEO of Cannabis for Wellness, a consulting company. She argues in the complaint that she worked under an oral contract to help TilStar file medical cannabis applications for grower, processor, and dispensary licenses. But when it came time to put the contract in writing, Akinnagbe alleges that TilStar and Hill stalled, and then offered her a contract that came with a 2% stake in another company called Earthstar. Akinnagbe refused the changes to her compensation package, according to the complaint.

“The value of TilStar was substantially enhanced by the services rendered” by Akinnagbe, the complaint reads, “and will continue to grow in the future, as a result of obtaining a dispensing license from MMCC,” the state’s cannabis regulatory agency.

According to the complaint, Hill, the chairman and CEO of TilStar, sent an email to Akinnagbe in October 2015 that reassured her: “I will craft a letter of intent that outlines our understanding, we can formalize the agreement once we get the app in.”

That never happened, according to Akinnagbe.

“I was told that if I provide a specific type of labor, I would be compensated. And that was not the outcome. And I was given an extreme runaround. My lawyers were given the runaround. I felt like my knowledge, my intellectual property, were poached. And ultimately I was left with nothing,” Akinnagbe told Cannabis Wire. “I did everything, and even at the end of it, I felt so excited. I felt like a little kid.” She said she spent time away from her family and hired a babysitter for her daughter in order to get the TilStar applications across the finish line.

Akinnagbe told Cannabis Wire that she hopes her experience can be a reality check for some people seeking to get into the cannabis industry. “There are people like myself out there. I don’t want to say ignorant, but I think perhaps a little optimistic or excited about getting into the field and being able to perhaps have an opportunity. So maybe you don’t look for all of the warning signs, you know? You trust.”

When first asked about Akinnagbe’s complaint, Privateer’s vice president for corporate affairs, Zack Hutson, told Cannabis Wire: “We have never heard of this person.” When Cannabis Wire followed up, Hutson said, “We are not familiar with the allegations made in this complaint and do not believe that we have been properly named as defendants. We feel confident that we can move quickly to remove ourselves from the complaint.”

According to Hutson, Privateer Holdings’ involvement in Maryland was short-lived. Privateer created Tilray, LLC, a company independent of Tilray Canada Ltd., “to explore medical cannabis opportunities in the United States.” Tilray, LLC owned 25% of TilStar, LLC, and was involved in the effort to make TilStar a successful medical cannabis applicant in Maryland; TilStar remains a licensed dispensary in operation. In December of 2017, Tilray, LLC sold its interest in TilStar to Hill (who could not be reached for comment by press time), according to Hutson.

Hutson added that Tilray, LLC was “dissolved” in July 2018, and “Neither Privateer Holdings nor Tilray nor any member of either companies’ management team has any ownership interest in or current affiliation with TilStar.”

Here are some of the individuals and entities from Privateer and Tilray named in an original Maryland TilStar application, obtained by Cannabis Wire: