An Auburn-based company that runs four of the eight medical marijuana dispensaries in Maine fired back at its extraction partner Wednesday by filing a complaint in Cumberland County Superior Court.
Wellness Connection of Maine filed the 33-page civil action seeking an unspecified amount of damages for breach of contract against CanWell, a company that extracts products for edible marijuana and that has operations in Maine.
Wellness Connection, which filed the lawsuit as Northeast Patients Group, claimed that CanWell did not perform extractions up to contract expectations.
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For its part, CanWell filed a 51-page “ demand for arbitration” on Aug. 21 naming Wellness Connection, along with its majority investor Acreage Holdings of New York, in a breach of contract dispute. It was filed in Kent County Superior Court in Rhode Island.
CanWell claimed, among other things, that Acreage and Wellness Connection breached a long-standing contract by terminating it July 12. The company said Wellness Connection owes it upward of $650,000 in product royalties and has not paid anything in 2019.
A large part of the disagreement is over CanWell’s yields for extracting THC from marijuana plants.
The CanWell filing said that Wellness Connection CEO Patricia Rosi in January 2019 expressed displeasure with CanWell’s yields. She reportedly said the yields were less than 40 percent. Wellness Connection’s yield targets were 85 percent to 90 percent. According to CanWell, Acreage said the yield disparity resulted in losses of $14 million for Wellness Connection.
But in its claim, Wellness Connection blamed CanWell for underperforming and said its process extracted only 20 percent to 30 percent of the THC, the main active ingredient of cannabis.
“Unfortunately, CanWell underperformed in many areas, but specifically, the operating procedures it laid out for us were flawed,” Matt Warner, an attorney representing Wellness Connection, said in a prepared statement. “The procedural flaws caused the equipment to consistently produce incredibly low yields, and caused [Wellness Connection] to lose large quantities of valuable THC.
“Despite multiple attempts to restore the relationship, the vendor eventually refused to cooperate and we were forced to terminate the agreement,” he said.
Wellness Connection entered into a long-term contract with CanWell in 2015 to provide the equipment, industry expertise, standard operating procedures and on-site training so that Wellness Connection employees could extract THC from the cannabis plants.
In its filing, CanWell alleged that the problems lie with Wellness Connections employees.
It blamed high turnover and inexperienced workers at Wellness Connection for the lower than expected yields. CanWell claimed that 20 employees from Wellness Connection’s processing and kitchen departments quit or were fired since Oct. 1, 2015.
But Wellness Connection countered in its complaint, saying, among other things, that CanWell supplied faulty equipment, and did not fully support and update it when the state of Maine implemented new requirements for marijuana extraction facilities, as the contract required.