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Northeast Patients Group, Inc. v. Canwell, LLC

Superior Court of Maine, Cumberland

October 7, 2019

NORTHEAST PATIENTS GROUP, INC. d/b/a Wellness Connection of Maine Plaintiff


          A. M. HORTON, JUSTICE

         This case came before the court October 4, 2019 for oral argument on the Motion for A Preliminary Injunction filed September 13, 2019 by Plaintiff Northeast Patients Group, Inc, d/b/a Wellness Connection of Maine [WCM]. The Motion is opposed by Defendants Canwell, LLC and Canwell Processing (Maine), LLC [sometimes referred to collectively as Canwell], The argument was electronically recorded, Based on the entire record, the court denies the Motion for the reasons stated below.


         The array of corporate entities involved in this case is complicated if not bewildering, so it bears some initial elucidation. Plaintiff, which does business as Wellness Connection of Maine [WCM] operates four medical marijuana dispensaries in Maine. Canwell, LLC is a multi-state cannabis business focusing on the alternative dosage or consumable side of the cannabis business model, as opposed to the flower or production side.

         Both WCM and Canwell, LLC are shareholders, along with others, in an entity called WPMC, which, like Canwell, LLC, is a multi-state actor in the cannabis industry. WPMC is 97.4 % owned by an entity called Acreage.

         Defendant Canwell Processing (Maine), LLC [Canwell Maine] is the Canwell entity that focuses on Canwell operations in Maine. Canwell, LLC is the sole member of Canwell Maine.

         In 2015, Plaintiff WCM entered into a contract with Defendant Canwell, LLC, the WPMC operating entity, and another entity called Wellness Connection Consulting, LLC [WCC], The contract, titled Alternative Dosage Services Agreement, called for Canwell, LLC "or its designee" to provide various services and products in connection with WCM's Maine dispensaries. (The Alternative Dosage Services Agreement is sometimes also referred to in the parties' filings and this Order as the Dosage Services Agreement).

         Canwell Maine was not a party to the Dosage Services Agreement, but Canwell LLC assigned its interest in the Agreement to Canwell Maine in 2018.

         In July 2019, WCM terminated the Dosage Services Agreement with Canwell, based on what WCM claims was Canwell's failure to perform as required.

         The "Governing Law and Venue" provision at section 13.7 of the Dosage Services Agreement provides for the "Agreement and the performance of all obligations thereunder" to be governed by Maine law and provides that the parties submit "to the exclusive jurisdiction of the courts of Maine, with respect to any dispute between the parties pertaining to this Agreement."

         Instead of challenging WCM's termination pursuant to that provision, Canwell invoked the arbitration provision of a different agreement to which WCM and Canwell, LLC (but not Canwell Maine) are parties-the "Amended and Restated Limited Liability Company Agreement of the Wellness & Pain Management Connection, LLC" dated October 26, 2015 [the Amended WPMC Operating Agreement].

         The Amended WPMC Operating Agreement at section 16.3 provides that it is governed by Delaware law and also provides that the parties submit to the jurisdiction of the Rhode Island courts for purposes of "any litigation arising directly or indirectly from this Agreement, including enforcement of any arbitrator's award under section 17." Section 17 calls for disputes to be submitted to binding arbitration:

The parties hereby agree that unless otherwise specifically required by law, any and all disputes, and legal and equitable claims between or among the Shareholders, the Directors, the officers, the Company, or any of them, or any combination of them, which relate to the rights and obligations of such Persons under the terms of this Agreement, any agreement contemplated hereby, or any future agreement, understanding or instrument to which two or more such Persons may be parties, shall be submitted to binding arbitration in Providence, Rhode Island in accordance with the commercial rules of the American Arbitration Association. Any Person who commences such arbitration hereunder or any litigation in violation of the terms hereof, and fails to prevail, shall be liable for all reasonable costs and expenses of the arbitration or litigation, including without limitation the fees of the arbitrator(s) and legal counsel to all parties, and witness fees of all parties to the proceeding.

         The central question at hand is whether the Amended WPMC Operating Agreement's arbitration provision modified or superseded the provision of the Dosage Services Agreement ...

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