Marijuana venture goes up in smoke, $5 million dispute lands in Aspen court
A business fallout over a marijuana-investment venture has landed in court.
Aspen businessman Jordan Lewis once forged a private-equity venture with New York-based agriculture investment firm B. Zaitz & Sons LLC and High Times magazine attorney Michael Kennedy, with a mission to raise $300 million to help sustain or launch marijuana businesses.
The venture, forged in the spring of 2014, captured headlines in such publications as Financial Times and Bloomberg. But on Tuesday, B. Zaitz & Sons LLC and two associated parties filed suit against Lewis and a host of limited liabilities he controls in Pitkin County District Court.
Lewis is the majority owner of Silverpeak Apothecary, one of the first recreational cannabis dispensaries to open in Aspen, as well as High Valley Farms, a cultivation facility near Basalt.
The suit, which seeks nearly $5 million, does not delve into how Lewis, Zaitz & Sons and Kennedy got into business. Kennedy’s name also is not mentioned in the complaint.
The lawsuit focuses instead on loans given to Lewis’ companies by B. Zaitz & Sons, Zaitz Trust LLC and David Zaitz, the CEO of B. Zaitz & Sons.
Lewis is accused of fraudulently transferring loans that were intended to support his Silverpeak and High Valley Farms operations to a marijuana venture he started in Uruguay.
“This case, among other things, seeks to unwind the fraudulent transfers made to and effectuated by Lewis and his Uruguayan venture under the Colorado Uniform Fraudulent Transfers Act,” the suit says in its opening statement.
Lewis on Thursday referred questions to his Aspen counsel, Daryl B. Cramer of the firm Genshaft Cramer LLP, who said in a statement: “Although we do not comment on pending litigation, we can say the allegations against Mr. Lewis and entities in Uruguay are unfounded and will be vigorously defended. The allegations by the Zaitz family as the most junior limited unsecured creditors to certain of the Silverpeak businesses in Colorado are unfortunate and will also be addressed in the appropriate forums.”
Lewis and his companies now owe $4.7 million on the loans, which have per annum interest rates ranging from 10 percent to 12 percent, and were not paid when they came due July 1, the suit contends.
Among the loans were $1.1 million that Zaitz & Sons provided to High Valley Farms in October 2013; $2 million given to Cooper Mason Ventures (controlled by Lewis) by the individual David Zaitz in June 2014; and separate loans of $250,000 and $125,000 from the Zaitz Trust to SP Operations LLC (also Lewis controlled) in June 2015 and July 2015, respectively, the suit alleges.
By 2016, Lewis began developing a pot enterprise in Uruguay; he was focusing most of his attention on the endeavor by 2017, the suit contends. Uruguay became the first country to legalize marijuana, in 2017. Lewis called his startup in the South American country Fotmer.
“From 2016 — facing the debt obligation to the Zaitz Parties and in an effort to divert money away from the Zaitz Parties — Jordan Lewis, as a principle of SP Parties and of Fotmer and as the primary director of the Uruguay Project, used the SP Parties’ money and assets to build and fund his Uruguay Project,” the suit alleges.
The suit makes one claim for fraudulent transfer and three claims for breach of contract. David Chipman and Ashley Schubert of the Denver firm Chipman Glasser LLC filed the complaint for the plaintiffs.
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