Money is like any drug: First comes the high, then comes the crash. Last year, the iGrow hydroponics store owned by Dhar Mann courted the media and Bay Area residents with the story of the "first out-of-the-closet marijuana hydroponics store." Mann had big plans. His company started a college called UniCann. They launched a franchise, WeGrow. But last week four small claims were filed against the Oakland company and some of its officers in what appears to be the first salvo in a series of legal actions this winter from local contractors and a former partner.
WeGrow co-owner Derek Peterson split with Mann in December and filed a small claims action February 22 against Joty Nagra, WeGrow's bookkeeper. Peterson has also filed a small claims case against WeGrow employee Tony Alvarez for $3,000 and WeGrow manager Justin Jorgensen. Peterson said the small claims are a prelude to a $50,000 claim against Mann for unpaid hydroponics inventory that WeGrow sold last year. Peterson intends to file the suit in Alameda County Superior Court this week.
Regarding his split with Peterson, Mann first told Legalization Nation that everything was fine, but finally admitted: "There have been disagreements. As far as what the outcomes will be, I'm not exactly sure right now.
"WeGrow does pay its bills," Mann said. "These are contractual disputes that happen with any business." Mann said WeGrow has suffered growing pains in its quick pivot from its roots as a hydroponic supply store, to opening the college, and then becoming a franchise and wholesale hydroponics supplier. Mann also intends to bid on permits for an Oakland pot farm and/or dispensary, should one become available.
Peterson — a competitor for such a permit — said that even though WeGrow is opening its first franchise in Sacramento and plans to move into Arizona and New Jersey, the company has had trouble keeping the doors open to its Oakland store and has a history of underpaying or not paying employees and contractors. Peterson said the company has been running at a loss. He sent copies of internal WeGrow e-mails to Legalization Nation that appear to show WeGrow lost $35,000 in the first ten months of 2010.
On February 22, Your Girl Friday Interiors filed a small claims action against WeGrow Oakland LLC in Alameda County for unspecified unpaid design services.
Mann said he didn't know why Your Girl Friday would have filed a claim.
There are other complaints as well. Don Marshall, co-owner of Harry Clark Plumbing and Heating in Oakland, said his lawyer is filing a lien on the WeGrow property near Interstate 880 in response to Mann's underpayment on air-conditioning work last year. "Underneath all the headlines there is some bullshit," he said. "This guy knew what he was doing and he had no intention of paying us. By the time the lawsuit is over it will cost me more to get him to pay us than it will be to do the job, but I'll go all the way."
Mann said Marshall sent him an invoice for $30,000 on a job that was estimated at $20,000, so he only paid the $20,000. "We paid him in full," Mann said.
"That's not true," Marshall responded. "There were no change orders." Marshall is searching for Mann's real address to serve him the lien papers, he said.
Twenty-year-old Oakland resident and former WeGrow cashier Daizha Valere said Mann hired her in August at $10 per hour, consistently paid late, when he paid at all, and lowered her paychecks to $8 per hour. WeGrow also withheld payroll taxes, and then issued her a W-2 stating that WeGrow had not withheld taxes, she said.
Mann conceded that Valere might have been underpaid.
Valere said she's heading to the Oakland office of the California Labor Commissioner with her pay stubs on March 1. Valere now works for Peterson, where she says working conditions are immensely better than at WeGrow's operation. "It was just a mess, I don't even know where to start," Valere said of WeGrow. "Bills weren't getting paid. People were constantly coming in and harassing us for money. Mostly it was just people coming in and saying we did $12,000 worth of work on this building and haven't gotten paid," she said.
The latest claims follow a months-long series of challenges for Mann, a former mortgage broker in Davis during the housing bubble, who is the son of a wealthy, politically connected Oakland family that owns multiple cab companies and real estate properties.
When iGrow launched, marijuana-shy hydroponics wholesalers canceled iGrow's accounts and the store's shelves went bare. Reviews on Yelp savaged the concern. Longtime drug law reformers bristled at Mann's brash approach and CannabisWarrior.com's Mickey Martin called him the "Bullshitter of the Week" in September.
Still the press lapped up iGrow's press release, and The Atlantic magazine even featured on its web site promotional material for Mann's plan to win a mega-pot farm permit in Oakland. Pressure from the federal government has since stalled Oakland's permitting process.
In the spirit of full disclosure, Mann has at least twice offered this reporter jobs in the past, and this reporter has turned him down.
Seeds & Stems
Berkeley Patients Group is still on the hook for $6.4 million in back taxes from 2004 to 2007, the California Board of Equalization ruled last week. The leading Berkeley dispensary was hoping for a deal, since weed wasn't ruled taxable by the board until 2007.