Verano raises ante in suit against marijuana operator Goodness Growth

(This story has been updated with comments from Goodness Growth.)

Verano Holdings Corp. is firing back against fellow marijuana multistate operator Goodness Growth, which recently filed an application seeking a summary trial in Vancouver, British Columbia, and nearly $861 million in damages after an all-stock deal to acquire the company was terminated.

Asking the court to dismiss Goodness Growth’s request for a summary determination, Verano argued that a summary trial is not the proper venue to decide such a complex matter.

“Verano should have access to the proper procedural safeguards proportionate to the matters at issue, including full documentary and oral discovery, the opportunity to retain and instruct experts, and the live testimony and cross-examination of witnesses and experts at trial,” Verano wrote in its Notice of Application.

In a news release, Chicago-based Verano called Goodness Growth’s application for a summary trial “no more than an effort to sway public opinion and … create false hope for its investors.”

The Supreme Court of British Columbia set hearing dates for Verano’s application for Aug. 27-28, according to the MSO, and a full trial could take place in 2026.

Failed acquisition

Goodness Growth initiated the most recent volley of legal proceedings on May 2.

The Minneapolis-headquartered MSO filed a notice with the court alleging that when Verano could not pressure Goodness Growth “to accept a purchase price significantly lower than” the all-stock deal valued at $413 million in early 2022, Verano terminated the companies’ agreement later in the year, arguing that Goodness Growth had breached terms of the deal.

Goodness Growth is seeking damages of $860.9 million, arguing the figure “represent(s) the loss of value that would have accrued to Goodness Growth had Verano fulfilled its contractual obligation to carry out the obligation.”

In its own court filing dated June 19, Verano alleges Goodness Growth’s nine-figure damages claim was informed by an affidavit that should be dismissed because the equity research analyst who wrote it is “unqualified” to act as an expert on business valuation.

Goodness Growth: Third party set damages

Calling the damages claim of $860.9 million a “senseless figure,” Verano said in its release that the report was “based on speculation and biased assumptions not supported by evidence” and should be ruled inadmissible.

Goodness Growth CEO Josh Rosen told MJBizDaily that “when we filed the application for summary determination, we knew some might raise their eyebrows at the sum of the damages we are seeking.”

“But as we pointed out then, the sum of the damages we are seeking was determined by a third party,” Rosen added.

“With respect to the damages calculation, we will leave that up to the court system and third parties to determine.”

‘Incurable’ deal

For its part, Verano argues that it was forced to terminate the purchase because Goodness Growth “breached numerous covenants in the Arrangement giving rise to another separate and independent right for Verano to terminate as the breaches were knowing and intentional and thus deemed to be incurable.”

Shortly after terminating the agreement, Verano said it was entitled to a $14.9 million termination fee under terms of its sale agreement with Goodness Growth.

While both Goodness Growth and Verano operate in the United States, both companies are incorporated in British Columbia and trade on Canadian stock exchanges.

Goodness Growth trades on the Canadian Securities Exchange as GDNS; Verano trades on the Cboe Canada exchange as VRNO.