Published in full by Courthouse News Service.
SAN DIEGO: The new owners of Medical Marijuana Inc. acquired it through fraud, former board members say in a state court suit.
William Martin and David Tobias say the Hemp Deposit and Distribution Corp.—doing business as CannaBank—and its president and founder, Michael Llamas, lied to them to acquire a controlling interest in Medical Marijuana Inc. in 2010.
CannaBank is a private equity firm that "specializes in capital allocation thru [sic] mergers and acquisitions in several core industries," according to its website.
Martin and Tobias in 2010 were board members of Medical Marijuana Inc., which is organized in Oregon, based in San Diego and is the "first publicly held company vested in the medical marijuana and industrial hemp industries," the suit says.
As board members, each was a "large" shareholder in Medical Marijuana Inc., Martin and Tobias say.
In May 2010, Martin says Llamas sent an unsolicited email proposing to merge CannaBank with Medical Marijuana Inc. Llamas and CannaBank would exchange debt-free assets for a "controlling amount of common stock" in Medical Marijuana Inc., Martin says.
Those assets included 10 properties plus "various patents, technology, intellectual property, and products in exchange for 260 million shares" in Medical Marijuana Inc., Martin and Tobias claim in the lawsuit.
Both sides agreed to the deal in March 2011, CannaBank also agreed to issue 30 million shares in Medical Marijuana Inc. to Martin and another 30 million to Tobias, the men claim.
But after CannaBank obtained the 260 million shares in Medical Marijuana Inc., they say CannaBank never issued the agreed-upon 60 million in combined shares to Martin and Tobias.