Entering a new market is usually not difficult for multi-state operators (MSOs) in the country. However, TerrAscend’s intention to expand into the New York market definitely didn’t sit well with the Scotts Miracle-Gro cannabis unit. A lawsuit has now surfaced in an attempt to prevent TerrAscend from setting foot in the Empire State territory.
Hawthorne, a subsidiary of Scotts Miracle-Gro, has filed a lawsuit against TerrAscend’s CEO and his investment company. Through the legal document, it is alleged that this management team is making certain moves to boycott Scotts’ purchase of a coveted cannabis license in New York in violation of federal antitrust law.
The lawsuit was filed in federal court in Manhattan and many believe it could turn into a long-running battle for privileged positions in markets that continue to offer limited licenses and are densely populated on the East Coast. The lawsuit could also be seen as a test of the power of big-name players in the marijuana market.
TerrAscend is known to have a strong position in the industry, especially for having exclusive rights to a brand as big as Cookies. Scotts, on the other hand, is a much larger publicly traded major company just outside the Fortune 500.
It is important to note that about a year ago, RIV Capital unveiled a deal to buy Etain Health. This makes the legal battle a bit interesting, considering that RIV Capital is an investment firm funded in part by Hawthorne Collective. However, its largest shareholder is Jason Wild, CEO of TerrAscend. The lawsuit alleges that Wild “pressured the RIV Capital board to cancel the Etain deal” and tried to thwart the acquisition in various ways.