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The social equity operator also alleges physical assault by security personnel.
This article has been updated to clarify that the previous case brought by Greg Levin was dismissed in August and to add additional comments from Vincent Zadeh.
A dispute over control of a California cannabis dispensary’s social equity license has led to a lawsuit. PNPLXPRESS Inc. and its owner, Joshua Eisenberg, accusing former executive Vincent Mehdizadeh of orchestrating a covert operation to seize the license designed to promote fair industry participation.
Eisenberg contends that Mehdizadeh, who goes by Vincent Zadeh, defied a 2017 U.S. Securities and Exchange Commission settlement that prohibited him from serving as an officer of a public company by indirectly managing Pineapple Ventures Inc., which approached Eisenberg’s dispensary for a merger in 2018.
According to the amended complaint filed Friday, after the merger, Eisenberg, who holds a majority stake in PNPLXPRESS, alleged that Zadeh exploited Eisenberg’s eligibility for a social equity license in Los Angeles and made moves to seize control over it for Pineapple Ventures, which wasn’t qualified for the license itself.
The suit claims that Zadeh forced Eisenberg into a management agreement under duress, violating Los Angeles’ cannabis social equity program rules, and accuses Pineapple Ventures of enacting a predatory lease to extract undue profits. It also alleges the doubling lease payments by involving another entity, Pineapple Consolidated, which was purportedly overseen by the same operators.
Eisenberg asserted Pineapple Ventures withheld financial information, failed to pay almost $400,000 in rent and taxes to the city, and illegally raised funds through unauthorized share sales.
He also alleged physical assault by security personnel when attempting to reclaim control of the dispensary.
According to filings, Eisenberg arranged to change how the dispensary was managed and wanted to keep using Code 4 as his security team during this change. He had a deal and a clear understanding with John Garcia, the manager of Code 4, that this was going to happen on Sept. 1.
However, when Eisenberg and his colleague (a PNPLXPRESS board member) Jenny Dills showed up at the dispensary on that day to start the transition, a security guard told them to leave. Eisenberg was told that Code 4 was sticking with their contract with Pineapple Ventures because Zadeh and Ortega had threatened to sue the security company.
The complaint noted, “Soon thereafter, a large team of Code 4 security personnel along with Zadeh and Jaime Ortega broke down the office door where Eisenberg and Dills had been and violently and physically grabbed Eisenberg causing him to suffer extreme pain and began removing him from the office. Dills was shocked and frightened at what she had witnessed and followed the men outside. Eisenberg was carried outside and slammed to the ground by Code 4 security personnel at the instructions of Zadeh and Jaime Ortega.”
Daniel J. Yourist of Yourist Law Corp. APC, who is representing the plaintiffs, told Law360, “The alleged predatory practices of Pineapple Ventures,Inc. and Pineapple Consolidated Inc. and its advisor Mr. Pejman Vincent Mehdizadeh pose not only a grave financial threat to our client but also stifle the essence of social equity that the cannabis industry aspires to uphold in Los Angeles and throughout California.”
Zadeh rebutted the allegations, countering that Eisenberg is the actual violator of the social equity program and has not contributed financially to the dispensary.
“As a result of everything that happened, we are currently replacing Eisenberg with another social equity partner that appreciates the opportunity to work with us, is not aggressive towards security and staff, and also conducts himself professionally,” Zadeh told Green Market Report in an email.
The conflict heads to court as both parties seek to resolve issues of contractual breaches and ethical conduct.
At the same time, Zadeh and Pineapple Ventures CFO Jaime Ortega filed an unlawful detainer action against Eisenberg and PNPLXPRESS, despite acknowledging in their own complaint that Eisenberg was removed from the store and does not have physical possession. “Eisenberg needed to be escorted out of the store on Sept. 1 when he tried to stage a takeover by calling a board meeting for the dispensary without the other director and a principal of the Pineapple Companies, Jaime Ortega, being present at the dispensary’s directors meeting,” Zadeh said. “At that meeting Eisenberg voted Jaime out of being an officer for the dispensary, declared the Pineapple Companies management agreement at the dispensary terminated, and also added a new director to the board. All of these actions were illegal including not giving the management company proper notice and the 15-day cure period of any alleged breaches as afforded in the management agreement.” “The logic is mind-boggling, and Zadeh and Ortega must be misleading their legal team in order to pursue this (minimally unethical and likely malicious) course of action,” a source close to the situation told Green Market Report.
Eisenberg and his attorney argued in a motion that the court should dismiss the eviction claim and cancel the summons due to procedural errors, citing early service of the five-day summons along with a prematurely filed complaint.
The new lawsuit filed against Zadeh follows a separate claim, which Green Market Report covered in April, alleging that Zadeh lured an investor to put up $290,000 in Pineapple Ventures with promises of $5,000 in monthly dividends, promises that reportedly were not kept. That case was dismissed with prejudice in August.