Investor Ross Weintraub Cannabis REIT Sues Innovative Industrial Properties Inc IIPR for failed due diligence on its investment in Kings Garden.

The plaintiff alleges that IIP did not tell investors the truth about its dealings with Kings Garden, writes Debra Borchardt of Green Market Report.

In January, another shareholder group sued IIP for failed due diligence on its investment in Kings Garden. These plaintiffs said IIP deceived investors, was incompetent and violated securities laws.

What happened

According to the complaint, IIP has repeatedly informed its investors that it has conducted due diligence on all of its business partners. However, when issues were raised regarding Kings Garden by third-party companies, IIP claimed that the company was not problematic.

The lawsuit filed by Weintraub in Maryland follows a report by Blue Orca Capital showing that Michael King, who is associated with Kings Garden, had a history of fraud, theft and litigation. The report was available back in 2019, before IIP signed a deal with Kings Garden.

“The report stated that the IIPR had purchased properties at prices far in excess of what the sellers who entered into sale-leaseback transactions had paid for the properties and that the IIPR, by recording the fair value of the properties when the purchase price disguised his true financial situation by overvaluing his assets,” the complaint reads.

According to Weintraub, IIP disputed the accuracy of the Blue Orca report, claiming it contained false and misleading information, and continued to support Kings Garden and Michael King.

However, in July 2022, IIP changed its stance and announced that Kings Garden had failed to pay its July 2022 rent under one of its leases.

The complaint alleges that the IIPR filed a lawsuit against Kings Garden, King and related parties alleging fraud, theft and violations of the Racketeer Influenced and Corrupt Organizations Act (RICO). “In that lawsuit, the IIPR acknowledged that it never…