A Hawaii businessman selected Friday to run medical marijuana dispensaries on Kauai is being sued in civil court for allegedly stealing more than $375,000 from a business partner last October.
On Friday, the Department of Health named eight licensees across Hawaii, including Justin Britt, of Green Aloha Ltd., as the winner of a single license to grow and sell medical cannabis on Kauai.
Britt beat four other Kauai applicants for the coveted permit to open two medical cannabis cultivation centers and two dispensaries this year.
But in a complaint filed in February, Britt’s business partner, Winston Welborn, contends that Britt illegally took $375,638 from their privately-held marketing and advertising firm Wasabi Design Inc. on October 7, 2015.
The state required applicants to prove that they had $1.2 million in the bank 90 days before applications were submitted in January.
The $375,000 was part of $1.9 million that Britt and Welborn received in settlement of a separate lawsuit against Trilogy Excursions, a sailing company, that allegedly breached a contract with Wasabi Design.
In his February complaint, Welborn said he expected each of them to receive about a half a million dollars after paying taxes and attorneys’ fees, but that Britt withdrew an additional $375,638 while Welborn was off island.
Welborn referred questions to his attorney, Katherine Caswell, a former Oahu deputy prosecutor.
“The business is basically screwed,” she said of Wasabi Design, adding that Welborn doesn’t have enough money to pay the company’s general excise taxes.
Shane Peters, spokesman for Green Aloha, said Britt declined to comment due to pending litigation. Peters said Green Aloha already has invested $3 million into the venture and looks forward to establishing dispensaries as soon as possible.
“At its core, this is a lawsuit from a disgruntled business partner of Justin Britt. It has nothing to do with Green Aloha,” Peters wrote in an email. “It is a dispute between partners in a separate business. We look forward to having this matter swiftly adjudicated. The evidence clearly shows that these claims are baseless and meant to leverage a financial settlement.”
An April 4 brief by Britt’s attorney, Daniel Hempey, alleged that Welborn added Green Aloha as a defendant frivolously in order to force Britt “into a quick and unfavorable settlement.”
Adding Green Aloha to this lawsuit is a tactical attempt by Plaintiff Welborn to force Defendant Britt to quickly settle the case and give up his claimed rights to the Wasabi funds, by naming a company that Britt shares with numerous investors as a defendant, causing harm to that company and pressure from its investors and unless Mr. Britt meets Mr. Welborn’s demands on this unrelated matter.
Caswell, though, said that the lawsuit is not intended to derail the establishment of medical marijuana dispensaries on Kauai.
She said she and Wellborn are excited that patients will soon have stores where they can purchase medical cannabis.
“We wish the funds had originated in a more legitimate manner,” she said. “This person could have taken the funds and started a cupcake store. I don’t want it to seem that we want to put a wrench in the (cannabis) business endeavor.”
The applicants who failed to win Kauai dispensary licenses include: HK Medicinal LLC, which is run by Charles Kawakami, the father of Kauai state Rep. Derek Kawakami and former president of Big Save Markets; Benjamin Paryka of 11th Street Partners LLC; James York of Hawaii Equity Partners LLC; and Thayne Taylor of Kauai Green Kokua LLC.
Read the complaint and the response from Britt and Green Aloha below: