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iAnthus in Trouble After Defaulting, CEO Resigned

The cannabis company Multi-State Operator (MSO) iAnthus has been in a great state of tumult after defaulting on a large loan which led to an investigation that caused their CEO to resign.

iAnthus came under great scrutiny when they were unable to make an interest payment of $4.4 million on their debt of $157.5 million to Gotham Green Partners.

Cannabis Company Problems

Founder and CEO Hadley Ford resigned from the company on Monday when the conclusion of the investigation was announced. It was found he failed to disclose two loans that amounted to $160,000, which were deemed a conflict of interest. It was a conflict because they were personal loans to Ford.

They underwent an internal investigation that included hiring Canaccord Genuity Corp. as a special advisor. They found that Ford should have disclosed the personal loans he received from a member of the board of Gotham Green Partners, which was attached to a larger loan to iAnthus. Ford was supposed to pay back the loan by March 31st and did not. In their announcement, the company said the investigation did not find that Ford’s loan was directly tied to the company defaulting on the larger payment.

“Management and the board decided it was in the best interest of the Company and our stakeholders to spend our cash to maintain the inherent value of our business operations,” said Ford said when the default was announced on March 31st, which smacked of impropriety.

Initially, Coronavirus was blamed for negatively impacting their business to explain the default. It raised a massive red flag which led to Ford leaving the company under a dark cloud.

Multi-State Operator Wall Street Machinations

Prior to founding iAnthus, Ford worked on Wall Street for 14 years.

Some shareholders are enraged at the default and are looking to sue the company for its failure to do so. The company was thought to be quite liquid. The news of the default and investigation caused its stock price to fall, resulting in some huge losses.

iAnthus is traded on the Canadian Securities Exchange. They halted trading heir stock two weeks ago to investigate these matters.

Gotham Green Partners is a major financial backer of the cannabis industry. It is difficult to secure bank loans since cannabis is still illegal on the federal level. So it makes them especially powerful within the industry.

Gotham Green did not respond to a request for comment on this story.

Fallout for iAnthus

Ford’s deputy Randy Maslow was appointed interim CEO of the cannabis company Multi-State Operator. He was previously the company’s president. He was also a co-founder of iAnthus. Maslow actually serves on the board of the New Jersey Cannabis Industry Association. According to iAnthus’ announcement, he received his law degree from Rutgers University.

The Multi-State Operator cannabis iAnthus bought MPX. They are planning to open a dispensary in Atlantic City. It received permission from the NJ Department of Health to begin growing. The pandemic has likely delayed its opening.

iAnthus is a large MSO with many locations under its umbrella in several states. One of them being New Jersey.

This was not the first nor will be it be the last scandal among the MSOs in the cannabis industry about financing.

Due to the tumult, iAnthus has postponed releasing its 2019 fourth-quarter earnings report.

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