Cannabis company sues Broomfield official, would-be competitors over licensing process
BROOMFIELD — A Boulder cannabis dispensary operator is suing Broomfield’s city and county clerk and a handful of other pot sellers, alleging that multiple applications to open pot shops have been submitted by the same companies in violation of Broomfield regulations.
Terrapin Care Station, through holding company Centroid Holdings Inc., claims that Broomfield city and county clerk Erika Lew has undermined the “fairness of proceedings” in the city’s application and lottery system used to select the three dispensaries that will be allowed to open up shop in Broomfield.
The city has been slow to allow for the operations of dispensaries in the years since recreational cannabis shops were legalized in Colorado in 2014. But in March, the Broomfield City Council passed an ordinance that opened the city up to pot sellers.
SPONSORED CONTENT
Federal District Court Rules Corporate Transparency Act Unconstitutional . . . But Most Small Businesses Must Still Comply
Lyons Gaddis Real Estate and Business Attorney Cameron Grant shares important details of the Corporate Transparency Act (CTA).
Following that decision, TCS submitted an application to open a retail cannabis shop at 300 Alter Street, Broomfield city documents show.
Over the past six months, would-be operators have been working through the application process in advance of an October deadline for a final report from the Broomfield Selection Committee tasked with vetting those applications.
Broomfield is now accepting public comment on submitted applications, and a lottery for licenses will be held after the committee report is issued.
Terrapin Care Station attorneys, in a complaint filed this week with the Colorado District Court in Broomfield, allege that a handful of TCS’ potential competitors — including Igadi Ltd, SMF Ltd., Yuma BRMT LLC, LP Management Co. LLC, Silverpeak Corp., Nathan Wetzel and Herbet Wetzel, Mark Busch, Mike Weinberger and Joshua Davis — have submitted multiple applications for licenses that are substantially similar. The lawsuit contends that city ordinance prohibits any individual or company from submitting more than one application.
“While the formal legal names of the entities through which they applied differ, the applications themselves clearly demonstrated that businesses and individuals created multiple entities and submitted applications through each of them,” according to the complaint.
In effect, these multiple submissions increase the likelihood that one of the defendants’ applications is selected during the lottery process, the plaintiff contends.
TCS claims that representatives reached out to Broomfield officials this month to inform the city that the clerk’s office was “breaking the law, attempting to undermine the fairness of proceedings, and depriving plaintiff of a fair opportunity to receive a license,” court documents show.
“Our aim is to protect the citizens of Broomfield from blatant ordinance violations by a handful of entities in the cannabis space looking to rig the system in their favor,” Terrapin vice president of external affairs Nico Pento said in an email to BizWest. “We promised a cannabis program in Broomfield that would leave a positive impact on the community. The city must ensure that applicants play by the rules to guarantee a successful program. We are confident that this lawsuit will offer peace of mind to the residents and businesses of Broomfield.”
According to Terrapin Care Station’s complaint, city officials replied soon after that they are “‘aware of the concern,’ but that Broomfield did not ‘agree that this concern constitutes grounds for the city and county clerk to change the status of any applications that were accepted by the office as complete, and their status at this stage will not be changed.’”
Terrapin provided BizWest with a copy of this correspondence.
“If you have not already posted your concerns in the public comment for the discussed applications, you are welcome to do so,” Broomfield city attorney Courtney Thiemann wrote in a letter to Terrapin. “This will ensure that the selection committee can consider your concerns in its evaluation of the applications.”
Broomfield officials said they have yet to be served the suit, have not reviewed it and declined to comment.
Terrapin’s suit demands that a judge rule that “Lew’s decision to allow the ineligible applicants to move forward in the lottery process is arbitrary, capricious, unconstitutional, and
contrary to law.”
In addition to unspecified damages, the suit also demands that the judge require Lew to vacate that decision and refrain from issuing licenses to so-called “ineligible applicants.”
© 2021 BizWest Media LLC
