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Pot Merchant Must Pay Partner $6.4M Over Ownership Spat

A cannabis entrepreneur and his company can't escape $6.4 million in damages owed to a former business partner who was shunted from the thriving venture, a Colorado federal judge has held, finding the court could hear a dispute stemming from businesses in the industry.

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Defendant Mackie Barch and his company, Trellis Holdings Maryland Inc., essentially argued that the injury to plaintiff David Joshua Bartch was not resolvable in federal court because cannabis is illegal under U.S. law, said the Feb. 1 order from U.S. District Judge R. Brooke Jackson on the defendants' motion to vacate.

The judge added that Barch and Trellis rely almost completely on just one case — Next Step Advisors LLC v. True Harvest Holdings Inc.  — where the court held that it didn't have jurisdiction over an asset purchase deal between cannabis companies because the "only available remedy would violate the [Controlled Substances Act]."

"But as plaintiff points out, in a more recent case the Ninth Circuit found that a plaintiff had Article III standing to bring claims for damages under [the Racketeer Influenced and Corrupt Organizations Act] based on alleged harms to their cannabis business, even though they lacked specific statutory standing under RICO itself," according to Judge Jackson.


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