Investors sue California cannabis group for bilking them out of $9.1 million

Three California investors – Benjamin Melendez, Ranjeet Pannu, and Bikramjit Singh Pannu – filed a lawsuit against executives of Culture Cannabis Club, Skybox Holdings 81, Mammoth Legend Consulting Inc., Bloomstone, and Proficient Profits claiming fraudulent behavior. The executive defendants named in the suit are Tommy Le, Julie Le, Christina D’Angelo, Devon Julian, Chris Francy, and Anh Rafol.

The three plaintiffs say they trusted and believed the group because of their personal relationships and associations in the cannabis industry. The alleged scheme began in 2021 when Melendez met with Tommy Le to discuss an investment in several dispensaries. He invested $100,000 for a 10% stake, although that was later reduced to 8.5% to accommodate other investors. Melendez continued to send money to cover construction costs for the dispensaries. Between October 2021 and November 2022, the complaint states that Melendez wired $700,000 to the Le, Skybox Holdings, and Hestia Atelier, LLP.

Ranjeet Pannu and ‘Bic’ Pannu claim they met with Tommy Le in December 2019 and were asked to invest $700,000 for a 20% interest in several of these dispensaries. They say they were told if they invested $1 million, they would own 15% of the Stanton dispensary. Ranjeet and Bic also allege that they were told if they invested $500,000, they would own 33% of the Stanton Cultivation facility. According to the complaint, Tommy Le sold the cultivation license without notifying the Plaintiffs.

In all, the three investors wired $9.1 million to the investment team. They claim they were never informed of any risks or received an offering memorandum.

No news was bad news

After the money was received, the investors say they got little information from the group regarding the investments. They claim in the complaint that they asked for information for years and were often given vague answers.

Then at the beginning of 2024, the complaint states that the plaintiffs learned that the funds they invested to open new stores in San Francisco, Costa Mesa, Barstow, and Corona, was spent. They allege,

Rather than using the funds for their intended purposes, Defendants diverted some of the investments to apply for licenses for other locations in California and other states, or used them as deposits to reserve certain facilities while the licenses were pending.

In addition to the California properties, the investors say that the group used their money to invest in cannabis licenses in Mississippi, New Jersey, and Florida.

As it turned out, the investments in the California dispensaries didn’t pan out. The complaint stated that some stores were never opened and the funds were exhausted.

“For Corona, the license was lost simply because Devon failed to mail in a renewal request on time. That store will never open. A store in Barstow burnt down with no sign of being rebuilt. Construction of the Costa Mesa and San Francisco stores are complete but never opened because the funds were diverted,” the suit asserted.

The investors stated that the Costa Mesa store was going to be the first retail license and the group pressured them to send money quickly to have first mover advantage. However, they say that Tommy Le later admitted he used the money elsewhere.

The investors claim they asked for their money to be returned, but the group said the funds had already been deployed. They also claim that they haven’t been given any share of the profits from the completed dispensaries and that the group continues to withhold information about the investments.

Pay Back

The investors are suing to get their money back and asked the court for a temporary restraining order to keep them from conducting cannabis business. They also want to be reimbursed for court costs.