High Times Holding Co., the publisher of the eponymous recreational drug magazine and media brands, has suddenly shut down at least three of its branded revenue-generating dispensaries in California.
Cannabis operations in Blythe, San Bernardino and Coalinga are permanently closed as of March 25. The closures come after months of failing to pay taxes, rent and health insurance premiums, according to dispensary employees and communications seen by CRB Monitor.
Former employees, who spoke on condition of anonymity because they had signed non-disclosure agreements, said they were offered no severance and some were owed back pay. Some took cannabis products from the stores as recompense, while others said they were not able to get needed medication in March because health insurance premiums had not been paid. They also said that High Times’ senior management, led by Executive Chairman Adam Levin and his half-brother and Operations Chief Maxx Abramowitz, gave the workers no notice of the impending closures, a possible violation of California’s WARN Act , which requires a company to give employees 60 days notice when a company-wide layoff is planned.
High Times bought the dispensary licenses and building leases in June 2020, in a deal with Washington-based Have A Heart and Florida-based Harvest Health & Recreation. Harvest paid $85.8 million in March 2020 for the HAH business, then turned about and sold the California locations to High Times a few months later for $80 million in cash and stock. The deal followed a series of breach-of-contract lawsuits and hearings with city officials before Levin succeeded in transferring the dispensary licenses partially into his name. A review of the dispensary licenses with the California licensing authority shows they are also still in the name of former Have A Heart founder Ryan Kunkel.
According to internal emails seen by CRB Monitor, High Times outside counsel Sharmi Shaw has told the state Department of Cannabis Control (DCC) that the company planned to surrender the licenses for the Coalinga store, set to expire on April 3, as well as those for the other two stores coming up for renewal. The Blythe dispensary license expires May 19, and the San Bernardino expires June 13, according to DCC records.
Shaw also stated to the DCC that the store’s inventory had been returned to distributors. But according to social media posts and interviews with several Coalinga employees, workers took some of the product in compensation for unpaid wages.
$100K tax liens
California state Uniform Commercial Code (UCC) records show the San Bernardino store, HAH 3 LLC, has at least two tax liens filed against it by the state, with a total unpaid tax bill of $103,000 as of September 2023. On February 28, the San Bernardino and Blythe buildings’ construction company, La Rocca Builders, also filed a judgment lien against the company.
High Times raised more than $35 million in a lightly regulated Reg A+ public offering in 2020 and promptly went on a buying spree in hopes to build a vertically-integrated cannabis production, processing and retail operation stretching from California to Arizona, Nevada, Illinois and Florida, at the height of the “Green Rush” heyday when cannabis asset prices were at their peak.
According to SEC filings made by the company last year, the company had taken secured loans from a venture fund called ExWorks for at least $28 million that had gone unpaid and resulted in litigation. All three closed locations also have UCC liens filed against them by ExWorks. High Times initially borrowed $11.5 million via a credit facility from ExWorks in 2017, which was later refinanced in 2018 into a $18.8 million senior secured convertible note carrying a $60,000 monthly interest payment, according to SEC filings. Levin offered a personal guarantee on the loan at the time.
Control in dispute
Who actually legally controls the dispensaries’ licenses is also up in the air now as ExWorks is also insolvent and has been assigned a receiver out of Chicago named Steven Kunkel, according to public filings and communication seen by CRB Monitor.
The SEC qualified High Times’ Reg A+ mini-IPO in 2018, in which unlisted shares were marketed to readers of its famed magazine and participants in its well-known Cannabis Cup events. But the SEC hit the brakes on the campaign in mid-2020 when High Times failed after several extensions to file timely audited annual reports. The last audited annual financials were filed in 2018, and the company was never taken public. In September 2023, High Times sold a piece of its brand licensing properties to Canadian-based Lucy Scientific.
Last September, Adam Levin was accused by the SEC of securities fraud involving a scheme to conceal paid promotions of a securities offering from at least April 2020 through August 2021. Levin was also accused of selling the Reg A+ offering after the SEC told him to halt it, according to the enforcement action. High Times settled with the SEC without admitting or denying guilt and agreed to pay a fine of $558,071.
High Times and Adam Levin did not respond to a request for comment as of press time.
