The former chief marketing officer of Grassroots Cannabis alleges CEO Mitch Kahn defrauded her out of millions of stock options, according to a lawsuit recently filed in Cook County Circuit Court. Grassroots, originally a Chicago-based group of dispensaries, completed a merger with Massachusetts-based Curaleaf in July 2020.
Documents filed with the allegations, brough by former CMO Lisa Hurwitz, provides a September 2018 employment agreement where Kahn promises Hurwitz $2,000,000 of stock, one percent of the company’s value at the time. A high ranking marketing executive at consumer packaged goods giant Kimberly-Clark, Hurwitz contends she was lured to Grassroots precisely because of the amount of stock offered in her employment agreement. Hurwitz’ suit alleges that Kahn dragged his feet in providing a necessary second agreement assigning the stock options, and two months after her start date, she refused to perform additional public relations work until the agreement was provided.
In response, Kahn did not provide a restricted stock agreement, Hurwitz says, but rather a phantom stock agreement. Hurwitz alleges that Kahn assured her that the value of her agreement was in line with other executives’ compensation, but actually resulted in many millions of dollars less compensation when Grassroots merged with Curaleaf in 2020.
According to the filings, Grassroots valued Curaleaf at $830 million at the time of the merger, which would have resulted in $8.3 million of stock grants to Hurwitz. Instead, Hurwitz’ phantom stock agreement resulted in her receiving about $1.6 million in cash, considerably less than the amount stipulated in her employment agreement.
Hurwitz was terminated from her position at Grassroots a few months after the merger, in September 2020.
A Curaleaf representative said the company had no comment on the allegations. Ms. Hurwitz’ attorney did not respond to a request for comment by publication.