A lawsuit is accusing State Senator Raj Mukherji (D-Hudson-32) of manipulating shady New Jersey cannabis dispensary license deals.

The suit says that “If left unredressed, the Defendants’ unlawful conduct and other similar misconduct throughout the industry threatens to obliterate the statutory objectives that served to justify the legalization of the sale and recreational use of marijuana in New Jersey.”

It adds that “they have done so by exploiting the social justice and minority owners’ need for capital finance and by taking advantage of their lack of cannabis-industry experience to coerce them into disadvantageous commercial agreements and relationships.”

People have whispered this to Heady NJ without being willing to go on the record for fear of retaliation for years.

Story Dispensary Management Lawsuit Details

According to the lawsuit filed in Union County Superior Court, Mukherji’s former Chief of Staff Justin Shoham felt left out of the scheme he was initially part of to open multiple cannabis dispensaries. He was the majority owner of a Story Dispensary location on paper.

Shoham worked with Mukherji to open it in Springfield in Union County, where NJ Cannabis Regulatory Commission (NJCRC) Chair Harris Laufer is the Mayor.

Laufer worked for Mukherji as his Chief of Staff prior to becoming an NJCRC Commissioner.

Lee Vartan, the highly politically connected attorney for Story Dispensary, in a statement to Politico NJ, called the lawsuit “a shakedown lawsuit of the worst kind” and said that if it’s not quickly dismissed, the company “will file counterclaims for the millions of dollars it lost in Springfield, in part because Mr. Shoham repeatedly breached his fiduciary duties.”

“I’m stunned to be named in this,” Mukherji said in a statement. “Whatever his quarrel, it’s not with me…. I have not been with the company for 2 or 3 years. And since that franchise lost millions, the record clearly shows nobody made a penny, except ironically Justin.”

“Justin went into it with eyes wide open. We detailed it to him. He was a trusted part of my alumni squad, and I was just trying to help him out with this introduction and an opportunity to make $180K without putting up a penny of capital and doing little work, comparatively,” he added.

Master Service Agreements and Dispensary Management

According to the lawsuit, they seemed to have used a Master Services Agreement (MSA), which the NJCRC has noted can turn an owner-operator into a figurehead.

The suit says, “In Springfield, they used Shoham’s name, social-equity qualifications and majority-on-paper ownership status to obtain and capitalize a cannabis license for a company from which he was later frozen out.”

“I’m a minority myself, and most of my partners and their families are either Black/Hispanic/Asian or women or veterans or impact zone residents or a combination thereof, so the idea that we needed or exploited Justin for that purpose is ridiculous,” Mukherji explained in a statement.

“It conflates franchises in which I invested with franchises I’ve never been part of,” he added.

The lawsuit gets complicated with Mukherji and Story utilizing several firms as part of the process. It notes “Mukherji is CannTech’s managing member and used CannTech as the advisory, structuring, and deal coordination vehicle through which he conducted relevant cannabis-business activity.”

So, they made Shoham a figurehead by “installing a management company bearing Mukherji’s own name to extract management fees and stipend payment…”

According to the lawsuit, “defendants’ illegal arrangements have deprived Shoham and other social justice and minority owners of their basic rights of beneficial ownership, including the right to profit sharing or other significant financial remuneration as well as all rights to control or meaningfully participate…”

Story Dispensary operates in a few other states, making it a Multi-State Operator (MSO).

According to the suit, “(Jason) Vedadi is the principal of Story Companies and affiliated Story-branded entities. Vedadi served as the co-architect, with Mukherji, of the reciprocal cross-branding arrangement described herein. Vedadi also controls the entities that extracted rent and operational value from Springfield Story Dispensary, LLC…”

It seems Story Dispensary of Springfield was operated so that Mukherji and Vedadi would make as much as possible while Shoham would make nothing.

“When Shoham asked what he would receive for his interest, Mukherji responded: “Paperwork says nothing. Negative value,” the lawsuit says.

In a statement, Vartan explained that “the Springfield dispensary lost millions in operating revenue during the critical months before the Route 22 corridor became oversaturated because Mr. Shoham had incurred thousands of dollars in unpaid parking tickets, for which the Springfield Police Department would not initially recommend approving his license, and then refused to turn over his tax returns to state investigators for a protracted period, delaying the dispensary’s opening further.”

“We do not intend to litigate this case in the press. BBNJ will do that in court, where our client’s counterclaims will seek recovery of the over $5.1 million in losses (including the debt that Mr. Shoham and his company defaulted on), together with the substantial additional losses suffered by the lender entities and Story as a result of his wrongful conduct. The record tells a very different story from the one presented in this complaint, which is rife with demonstrably false statements and allegations,” he added.

One way or another, Story dispensary in Springfield has closed.

Part of the complication described in the lawsuit is that the MSO Verano/Zen Leaf was going to buy it. But that deal doesn’t seem to have gone through. So the location remains closed.

Story Dispensary of Hoboken Connection

The lawsuit also explains that the shady deals they were involved with included “Hoboken/Story (brokered by CannTech).”

The Story dispensary in Hoboken had a similarly shady story around the politics of it getting approved.

A lawsuit by Nature’s Touch dispensary, which wasn’t allowed to open, says former Mayor Ravi Bhalla allowed Story dispensary to get through the process in exchange for contracts from Jersey City through former Mayor Steve Fulop.

NJ Cannabis Dispensary License Schemes

It seems Shoham was part of a larger plan by Mukherji to open a dispensary in Springfield as well as Union Township. Another partner was used for one in Parsippany in Morris County.

The lawsuit says that “on August 29, 2022, Mukherji told Shoham that the Union fees would be “paid out of Springfield instead of Union” because of CRC scrutiny of consulting agreements, acknowledging the debt while changing only its proposed source, and confirmed that “until the buyout, you are the… 60% owner.”

The lawsuit notes “Anusha Alagarasan…Mukherji’s sister-in-law, is listed as member/manager of Fresh Dispensary Parsippany LLC…”

Mukherji previously owned Garden State Dispensary, which was a vertically integrated medical cannabis company based in Woodbridge that the MSO Ayr ultimately bought.