A popular cannabis company was cleared in an ex-chief financial officer (CFO)’s complaint whose allegations included wrongful termination, breach of contract, and promissory fraud.
Former MedMen Enterprises CFO James Parker filed the complaint in California state court but the jury’s verdict was favorable to the defendants.
“The cannabis industry is becoming mainstream, like any other business, and a chief financial officer has fiduciary duties and this verdict proves that a jury is willing to find that in 2021,” said William Dugan, who represented MedMen attorneys James Ward, Jacob Kaplan, Sara Pitt, and Erin Shields.
MedMen, a national cannabis dispensary, and delivery service was the first cannabis company to go public in Canada.
Parker was hired in 2018.
“The former chief financial officer made sensationalized claims against the company and, frankly, tried to bring down a leading company in this space all while seeking tens of millions of dollars under a self-dealing contract that he procured for himself,” Dugan told the Southern California Record.
Parker alleged stock fraud and that MedMen wanted him to illegally move cannabis across state lines.
“That was one of his bases for saying that he was constructively discharged and that he had to quit the company because of supposedly illegal activity within the company,” Dugan said. “The jury rejected his constructive discharge claim. He made other claims of alleged illegal activity and he made claims of a hostile, sexist, misogynistic, and racist work environment.”
Parker had sought $24 million in severance pay and equity shares.
“The only way that he would get that money is if he proved that he was constructively discharged, that there was a toxic work environment and that there was illegal activity because, under California law, constructive discharge means the company makes a person's work conditions so intolerable that it is essentially a termination and the person had no choice but to quit but the jury did not agree that the MedMen work environment was intolerable.”
Dugan commended the jury for treating MedMen like any other mainstream company.
“That's been MedMen's brand since the beginning is to try and mainstream cannabis,” he said. “They've made their stores dispensaries and they’ve put them in higher-end areas rather than being in a strip mall somewhere that doesn't look very nice and has Grateful Dead t-shirts all over the place.”
Parker now has the opportunity to appeal the jury's verdict, which was issued on Nov. 22, while MedMen, as the prevailing party can recover costs.