JEFFERSON CITY — A Kansas City-based cannabis company said in a lawsuit filed earlier this year that a marijuana grower in Perryville illegally traded in foreign marijuana, a claim the grower said was an attempt to “smear” its reputation.
Kansas City-based Green Four Ventures, trading as Clovr Cannabis, sued Archimedes Medical Holdings Jan. 10, stating that state authorities “to the best of their knowledge and belief” had found Archimedes “involved in illegal interstate drug trafficking.” The alleged activity resulted in losses for Clovr, according to the lawsuit, which was filed in Jackson County Circuit Court.
The suit names as defendants Hayley Rosenblum Dudney, Blonie Dudney, Nancy Dudney and Jason Buchheit, who are described as Archimedes officers, all with addresses in the St. Louis area.
Hayley Rosenblum Dudney is the daughter of St. Louis criminal defense attorney Scott Rosenblum. Archimedes used the brand name Solhaus.
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Lisa Cox, spokeswoman for the Department of Health and Elderly Services, which regulates the state’s medical marijuana program, said in a statement that two out of three cultivation licenses related to Archimedes “are currently on hold.”
“The investigation is ongoing,” she said.
Cox said a suspended license belonged to Archimedes. The second license she said was suspended belongs to FUJM LLC, which lists Blonie Dudney as a contact on state records. Cox did not say that a third license tied to Archimedes was suspended.
“Archimedes categorically denies every single allegation made by CLOVR and expressly denies any statements or allegations related to findings by DHSS,” said Tanner Rofles, Archimedes’ attorney, who works for Rosenblum’s law firm, in a statement Thursday. “In addition, we will take appropriate legal action against any person or entity that makes defamatory allegations,” he said.
Solicited for a reply, Clovr’s legal counsel said in an email on Friday, “As this matter is pending litigation, Green Four Ventures does not deem it appropriate to comment on this matter at this time.
“Instead, we will allow the facts of this dispute to play out in a courtroom, rather than discussing this matter in the media,” the attorney said.
Clovr’s petition states that the company purchased 40 pounds of Archimedes marijuana through dispensary Green Releaf in or about April 2021. The marijuana was shipped to the company’s Jackson County manufacturing facility around April 16, the lawsuit said.
Clovr then extracted the THC from Archimedes’ marijuana flower and manufactured edibles for sale in Missouri, the lawsuit alleges. Clovr said the state began investigating Archimedes after he bought the flower.
Missouri’s medical marijuana program requires that cannabis sold be grown in the state.
After state officials “determined” that Archimedes had trafficked marijuana from out of state, Clovr’s lawsuit said the DHSS “administratively withheld” Archimedes’ operations, the lawsuit said.
The state also issued an order banning retailers, including Clovr, from selling products containing Archimedes flowers, Clovr’s lawsuit states.
Clovr said about $1.7 million in inventory was frozen and that it lost $280,000 in revenue in the first week of the lockdown and $230,000 in revenue in the second week.
The company said the reluctance has also reduced confidence in Clovr’s products, leading to a “significant drop” in average weekly sales.
Archimedes said the alleged product lockdown took place in October this year.
“This case includes allegations that in October 2021 certain products manufactured by Green Four Ventures dba CLOVR were placed on administrative hold by the DHSS for a total of six days,” the company said.
“At the end of this period, these products were approved for sale by DHSS,” the company said. “CLOVR’s $1.7 million claim for damages resulting from a six-day product ban by DHSS is outrageous.
“This lawsuit constitutes a shameful attempt by CLOVR to defame a competitor’s name,” it said.
When asked if Clovr’s products had been placed under an administrative lockdown over the past year, Cox, the spokeswoman for the Department of Health and Elderly Services, said “yes.”
When asked how long the ban had lasted, Cox said, “To date, an administrative ban, which was issued in connection with the ongoing investigation, remains in place.”
Cox was told about the statements by Archimedes and Clovr that suggested a lockdown had been lifted and said the current lockdown appeared different from what the companies were referring to.
“It appears that the information you have below relates to a different admin hold than the one we referenced,” she said in an email. “As stated in our previous response, an administrative hold also still exists, but the quantity of product, if any, associated with this hold on a particular licensee would be confidential under Article XIV” of the Missouri Constitution.
Clovr asked Jackson County District Judge Bryan Round to find Archimedes negligent and award him damages and attorneys’ fees.
The company also demanded that he hold company bosses individually liable.
Archimedes moved last month to have Clovr’s lawsuit dismissed. It also filed a motion to move the case to St. Louis County.
Clovr CEO Josh Mitchem traveled to the Capitol last month to urge the sponsor of a move to fully legalize marijuana to introduce restrictions on cannabis business licenses.
Archimedes and FUJM are named as defendants along with the state Department of Health and Senior Services in a separate lawsuit filed in Franklin County Circuit Court in February.
In its complaint, MR 5025 OH 100, a Missouri limited liability company doing business as Midwest Roots, says that in September the state health department administratively withheld products related to the three Archimedes and FUJM licenses.
Around Oct. 5, the DHSS said a ban was inadvertently imposed, but on the same day the Health Department placed another ban on products associated with the three licenses, the lawsuit says.
Midwest Roots said more than 1,000 pounds of trimmings and flowers purchased by the defendants remained frozen by a state order at the time the lawsuit was filed.
“DHSS has failed and refused to provide explanations or details as to the nature or status of the ‘government investigation,’ nor when, if at all, the affected product will be released,” the lawsuit reads.
Given the suspension period, “the affected product is effectively useless to Midwest Roots,” the lawsuit states. “With each passing day, the affected Midwest Roots product will continue to deplete its THC and CBD levels.”
Archimedes filed a motion to dismiss March 24 on one of three counts in the Midwest Roots lawsuit. DHSS has filed a motion in Franklin County Circuit Court to dismiss the state from the lawsuit.