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Federal lawsuit reveals behind-the-scenes saga of failed Missouri marijuana testing lab

Posted on Thursday, November 30, 2023 at 8:04 am

The rare glimpse into how Missouri medical marijuana business applicants came together echoes more the recent controversy involving social equity licenses

 

By Rebeca Rivas 

Missouri Independent

After Missouri voters legalized medical marijuana in November 2018, Jefferson City lobbyist Jeffrey Altmann went to work.

Altmann knew out-of-state investors would be looking for Missouri residents to partner with — since Missourians, by law, needed to have majority ownership in marijuana businesses.

Touting his political connections, Altmann caught the attention of an investor from a New-York based pharmaceutical company named Matt Wolf. 

Altmann is owner of Viceroy Government Relations, a lobbying firm he has operated since 2017. His brother Daniel worked for the legislature for two years and eventually as a lobbyist for the Missouri Secretary of State’s office in early 2019. 

Wolf agreed to partner with the Altmanns on a cannabis license application, after meeting for several hours at Felix’s restaurant in St. Louis in July 2019. As they left, they all shook hands and Wolf told them: “We are going to make a lot of money together.”

But that’s not what happened.  

Despite being one of the first cannabis licenses awarded in the state, their testing lab, Botannis Labs MO Corp., never got off the ground in Springfield because of a series of internal battles between Wolf and the brothers. 

Missouri’s cannabis regulators eventually revoked their license.

Since March 2022, the Altmanns and Wolf have been in a legal standoff over lost money and allegations of deceit. 

Wolf, who was going to be CEO of Botannis, filed a federal complaint asking for a jury to clarify what his legal responsibility is in the business, along with court costs. Daniel Altmann, president of Botannis, filed a counterclaim alleging fraud and a breach of fiduciary responsibility, demanding Wolf pay $25,000 in damages.

An attempt to settle failed earlier this year.

Despite the legal mess, the filings in the case — which include emails, agreements and sale projections — offer a rare glimpse into what was happening in the early days of medical marijuana applications. 

Some Missourians who were trying to partner with outside investors weren’t selling their marijuana expertise — they were selling their knowledge of Missouri’s political landscape.

And some investors were trying to strongarm Missourians into signing agreements that would ultimately push them out of ownership for a token payment.

The drama echoes the recent controversy involving microbusiness cannabis licenses, where some applicants thought they were partnering with a Michigan investor but signed agreements that forced them to relinquish all control and profits of the business. 

Henry Elster, attorney for Daniel Altmann, said he couldn’t comment on the pending litigation. Wolf’s attorneys did not respond to requests for comment.  Jeffrey Altmann declined to comment.

How they met

The way Wolf tells the story in his complaint, he was exploring business opportunities in Missouri in June 2019 when he was introduced to Jeffrey Altmann as a lobbyist.

“Jeffrey Altmann aggressively markets himself and his supposed influence on Missouri lawmakers and regulators,” states the complaint Wolf filed on April 4, 2022, in the U.S. District Court for the Eastern District of Missouri.  

According to Daniel Altmann’s counterclaim, an attorney with the cannabis law firm Vicente Sederberg (now called Vicente LLP) contacted Jeffrey on behalf of Wolf to “explore opening a medical marijuana lab in Missouri.” 

Jeffrey was a registered lobbyist in Missouri for Vicente Sederberg from March 2019 to March 2020, and had already worked with the firm to help another of its clients.

At a meeting with Jeffrey, Wolf talked about his family’s business in New York, Contract Pharmaceutical Corp., where he’s been CEO for the last 17 years. Wolf told Jeffrey that he wanted to establish cannabis labs in multiple states using the name Botannis, according to Daniel’s counterclaim. 

That same day of that meeting, Jeffrey registered as a lobbyist for Botannis and “began actively working on behalf of Wolf and Botannis to obtain one or more marijuana licenses in Missouri,” the counterclaim states. 

At that point, Jeffrey felt like he was “part of the Botannis team,” it states, and that the law firm Vicente Sederberg was representing him as well. 

In July, Jeffrey and Wolf officially decided to partner together on a testing license application. Yet by the end of that month, there was some “uncertainty” regarding Jeffrey’s eligibility under state law to be on the application, Daniel’s claim states.

So, they recruited Daniel, who had just graduated from college and had also recently been a legislative liaison for Secretary of State Jay Ashcroft. 

“Wolf thoroughly vetted Daniel as to his knowledge, experience and credentials, including his positions with the Missouri Secretary of State,” according to Daniel’s petition.

Wolf said he “tentatively agreed to this substitution” in order to apply for the license.

“Mindful that he would be potentially contributing capital and expertise — while the recently graduated Daniel Altmann was contributing merely state residency,” the petition states, “Wolf made clear that the parties would have to agree to protections reflecting Wolf’s potential investment, were Botannis to obtain a license and the business to go forward.”

Where it all broke down

If it wasn’t clear to the brothers at the time that Wolf saw Daniel as “contributing merely state residency,” it became clear the day the team landed the marijuana license on Dec. 18, 2019.

That day, a Vicente attorney sent Daniel an email with an option agreement. It offered Daniel $1,000 to agree to sell enough shares of the company to give Wolf majority ownership — if Missouri’s residency requirement was ever changed. And that arrangement would be intact for 15 years. 

He also sent a revised copy of the bylaws that would add Wolf’s brother as a director — giving Matt and his brother majority voting power with only three directors.

Wolf viewed these moves as a way to protect his investment and intellectual property, his petition states.

Daniel’s response was delayed because he said he was on vacation and was recovering from an illness, according to Wolf’s petition.

At the end of January, Daniel responded that he read the documents and was feeling “optimistic,” the petition states, but that he wanted his attorney to review the documents.

Then on Feb. 4, 2020, Jeffrey emailed the Vicente attorney, stating: “My brother won’t be signing anything you have provided, and I think you know why. Nice try, but no thanks…Very disappointed, and hoping this was a miscommunication we can fix.”

Signing the documents, according to Daniel’s counterclaim, would mean he’d lose control of Botannis immediately if the law changed and it’d render his shares “effectively worthless.”

Daniel alleges Wolf refused to do anything for the company until he signed the documents.

Wolf argues he offered to make revisions to the bylaws and shareholders agreement, but the option agreement is not among the revised documents listed. Communication fizzled for about a year after that.

On Feb. 9, 2021, Jeffrey emailed Wolf stating that he was reviewing the documents with his attorney. He later sent back some marked-up versions of the shareholders agreement and bylaws.

But on March 2, 2021, the state revoked Botannis’ license.

Wolf’s commitment

In his lawsuit, Wolf denies that he ever had any obligation to Daniel “or to anyone to provide capital to, or to provide services on behalf of, Botannis.”

He admits that he signed an affidavit included in the state’s license application stating that he’d make a “revocable pledge” of $400,000 to “successfully carry out the activities described in the application.”  

But he emphasized that it was “revocable” in his lawsuit.

The Independent asked cannabis regulators if they would’ve approved the license if Wolf’s $400,000 pledge was contingent on the Missouri resident agreeing to sell his shares. Lisa Cox, spokeswoman for the Missouri Department of Health and Senior Services, said in an email: “It would depend on the details of the agreements at issue.”

During early discussions with Jeffrey, Wolf sent an email stating he would make a funding commitment of $200,000 at close, $300,000 at licensing, $500,000 at first revenue.”

But Wolf emphasized the email also states, “for discussion.” 

When Daniel’s attorneys tried to force Wolf to sign the settlement agreement, a judge issued an order on Oct. 13 ruling that Wolf wasn’t obligated to do so. 

The litigation is ongoing.