click to enlarge - File: Lee krohn
- Shayne Lynn in 2017
A Vermont judge has thrown out a lawsuit filed by a Burlington cannabis entrepreneur who claimed he was “hoodwinked” by the Canadian company that bought his business.
Shayne Lynn of High Fidelity alleged that Toronto-based SLANG Worldwide gave fraudulent and negligent misrepresentations when discussing its financial condition during a $25 million merger in 2021.
SLANG, a publicly traded company, buys and sells licenses for cannabis edibles and accessories. Executives told Lynn the company “was financially sound and had a bright economic future,” the suit alleged, and they promised Lynn $18 million to finance his plans for growth.
In reality, the company was “teetering on the edge of insolvency” and needed to borrow $18 million to survive.
“The failure to make disclosures and the misrepresentations by Defendants caused Mr. Lynn to agree to the Merger Agreement,” the suit says. “Had he known the true financial status of [SLANG], he never would have agreed to merge with it.”
Lynn filed the suit last August, and SLANG moved to have it dismissed shortly after. In her March 7 decision, Judge Helen Toor sided with SLANG, finding that Lynn had proved neither element of the suit.
“Lynn’s claim of a scheme is based entirely on statements of opinion, or puffery, and a promise to invest money at some undetermined time in the future,” Toor wrote. Further, Lynn failed to “allege that Defendants owed him a duty to disclose Slang’s financial situation, or that he was unable to verify that information for himself.”
Lynn once held two of Vermont’s five medical marijuana licenses and operated stores under the name Champlain Valley Dispensary and Southern Vermont Wellness. He later changed the name to CeresMED, which operated under a parent company, High Fidelity.
SLANG, which created a Vermont branch of its operations, owns Ceres Collaborative, an adult-use cannabis store on Burlington’s College Street. In recent months, Lynn and a business partner opened Lucky You, a cannabis shop on nearby Cherry Street.
SLANG declined to comment on Toor’s decision. In a statement, Lynn’s attorney, Pietro Lynn, said, “We intend to appeal and expect to win.”
“We are deeply disappointed by the judge’s ruling,” he wrote. “We believe she is incorrect and that the inaccurate statements identified in the complaint are sufficient to support a claim against the Defendants.”