A New Jersey federal judge refused to toss a cannabis company’s explosive allegations that a lender fabricated a loan default to grab almost $2 million, ruling that the complaint lays out plausible claims that the lender reneged on binding promises.
In an order filed Saturday, U.S. District Judge Zahid N. Quraishi denied a motion by Advanced Flower Capital Inc. (AFC) and AFC Agent LLC seeking dismissal of a suit brought by subsidiaries of Justice Cannabis Co. The judge rejected AFC’s contention that the companies were unquestionably in default on their loans.
A Bitter Multistate Business Feud
The case is one part of a sprawling fight between the Justice Cannabis entities — Hayden Gateway LLC, Bloc Dispensary LLC and JG HoldCo LLC — and their lender, AFC, along with AFC officers. AFC claims the borrowers defaulted on loans meant to fuel their cannabis operations. The Justice entities counter that AFC, working with Timothy Bossidy, the former chief restructuring officer installed by the lender, deliberately destabilized the companies to take control of their assets.
AFC has lodged a separate suit against Justice Cannabis’ owners, alleging misuse of funds. Meanwhile, Justice Cannabis sued Bossidy in March for breach of fiduciary duty and conversion, accusing him and AFC Gamma of intentionally steering the company toward collapse to plunder its holdings. Judge Quraishi granted an injunction in May blocking AFC from seizing any Justice Cannabis assets.
