Lawsuit Filed by Michel & Associates Against Terra Tech on Behalf of Alleged Former Partner Forced Out of Santa Ana Cannabis Shops

LONG BEACH, Calif., Sept. 11, 2019 /PRNewswire/ -- Santa Ana cannabis businessman Wojciech Smolenski, through his counsel at Michel & Associates, PC, has filed a complaint in a Santa Ana court against his former employer, Terra Tech Corp., and alleged former partners contending that Terra Tech and other defendants defrauded him of profits from development of Santa Ana cannabis businesses. Terra Tech, a publicly-traded company specializing in cannabis operations, entered the Orange County cannabis market in 2017 when it acquired The Reserve retail cannabis store in Santa Ana and rebranded it as a Blüm store. Terra Tech later acquired an ownership stake in another Santa Ana cannabis operation, The Healing Tree Collective.

In addition to Terra Tech, Smolenski's suit names affiliated companies and officers of Terra Tech as defendants.  Smolenski claims that Terra Tech and two company officers used false promises of a partnership in developing several Santa Ana properties into cannabis businesses to induce him to allow Terra Tech to take over lucrative real estate deals on those properties to which Smolenski had exclusive rights.

Smolenski's July 20, 2019 cross-complaint claims that Terra Tech fêted him to join Terra Tech and several others as a partner in developing Santa Ana cannabis businesses. Terra Tech brought him on board as a company executive.  Smolenski then alleges in his lawsuit that once Terra Tech gained his trust, Terra Tech and its officers terminated his employment and forced him out of their partnership in two other cannabis businesses.  Smolenski's complaint against Terra Tech, its subsidiaries Medifarm So Cal and 55 OC Collective, and Terra Tech officers Michael Nahass and Derek Peterson, alleges causes of action for fraud, contractual breaches, and employment law violations.

According to Smolenski's complaint, Terra Tech sought to expand its cannabis business into Orange County in 2017 by purchasing an existing cannabis business in Santa Ana with which Smolenski was affiliated, The Reserve.  Smolenski's suit alleges that after Terra Tech acquired The Reserve, Nahass and Peterson then began actively recruiting Smolenski to partner with them and Terra Tech to grow the acquired California operations as well as develop new retail, manufacturing, and cultivation businesses at other Santa Ana properties.  Smolenski claims that in exchange for partnering with Terra Tech on developing new businesses at Santa Ana "Green Zone" locations Smolenski was already in escrow to purchase, Peterson and Nahass agreed that Terra Tech would front capital costs on the businesses and share profits from those businesses with Smolenski.  Smolenski claims they also agreed to employ him with a lucrative salary and benefits as a high-level employee of Terra Tech.

Smolenski claims that these promises were shams to get control of the two Green Zone properties Smolenski was already in the process of purchasing.  Specifically, his lawsuit alleges that once Smolenski transferred the purchase rights over to Terra Tech, and secured city cannabis licenses for the properties, Peterson and Nahass came up with pretextual reasons to fire Smolenski from his Terra Tech job and repudiate the existence of the partnership.  Smolenski also claims that Terra Tech failed to provide him stock options and pay bonuses he had earned at the time of his termination from his employment.

Smolenski's complaint also claims that Terra Tech has a practice of going into new markets, finding investors or local cannabis operations, and then purporting to partner with them only to later force them out.  Smolenski's claims are similar to claims in a lawsuit settled earlier this year between Terra Tech and a Nevada investor.  In November 2018, Terra Tech and other affiliated companies and officers, including Nahass and Peterson, were sued in a Reno court in Medifarm I, LLC, v. Terra Tech, Inc.

That lawsuit claimed that local Reno businesswoman Heidi Loeb Hegerich was solicited by Nahass, Peterson, and others to contribute capital and other assets to a joint venture with Terra Tech to open Reno-area cannabis businesses. That lawsuit alleged that after Hegerich contributed capital and joined the venture, Terra Tech and other partners improperly diverted assets from the venture, attempted to lock Hegerich out of the operations and the books, and began working with a competing cannabis business.

That lawsuit was settled within three months after it was filed, with Terra Tech paying the plaintiffs $6.3 million but disclaiming liability. Terra Tech has recently decided to sell the Reno dispensary that was part of that lawsuit—Blüm Reno—for $15 million.

Smolenski's complaint comes in response to Terra Tech's own lawsuit against Smolenski, Smolenki's wife, and an affiliated company that was filed earlier this year.  Among the allegations in that complaint, Terra Tech claims that Smolenski stole money from the company, damaged a company computer, and sold cannabis products for Terra Tech but failed to remit the proceeds to Terra Tech.  Smolenski filed an answer to Terra Tech's lawsuit in July denying the claims.  Terra Tech has not yet answered Smolenski's suit.

SOURCE Michel & Associates, PC