SAN FRANCISCO--(BUSINESS WIRE)--Bhang, Inc., the leading US edible medical cannabis brand, entered into an agreement with Mentor Capital, a publicly-traded company (OTCQB: MNTR), in early 2014. Under the contract, Mentor was to purchase a 60% interest in Bhang for $39 million. Mentor made an initial payment of $1.5 million and then failed to make any subsequent payments. When Mentor missed the first installment of $7.5 million, Bhang informed Mentor they were in violation of the agreement and publicly announced their intention to rescind the deal.
The parties ended up in arbitration. The Arbitrator's ruling rescinded the contract and returned the parties to their original positions prior to entering the agreement. The court-ordered rollback of the deal requires Bhang to return Mentor's initial down payment.
In a clear win for Bhang, the court also ordered Mentor to pay back over $200,000, plus interest, that Bhang’s owners and others had invested directly in Mentor stock. Additionally, Mentor was ordered to remove all reference to its ‘investment’ in Bhang from its website.
"We are very happy to be out from under Mentor," said Scott Van Rixel, CEO of Bhang in an interview. “After entering the deal with Mentor their ‘foreign financing’ for our deal mysteriously evaporated. Mentor also failed to disclose that the SEC had issued a Cease and Desist Order against them for their stock dealings in the past. We have been trying to sever ties with Mentor ever since. Understandably, we refused to issue our shares to them under those circumstances. Plus, we wanted our money back that we had invested in them,” he continued.
“This is a good result for us,” commented Richard Sellers, COO of Bhang. “We are ready to roll out several new products which we are very excited about. We can now get back to making industry-leading consumable cannabis products without Mentor hanging over our heads.”
Bhang, a leading cannabis brand and six-time winner of the Cannabis Cup, produces award-winning chocolates, vape systems, gum, and oils. Despite the distraction of the 2 year lawsuit, Bhang was able to successfully grow the company and the Bhang brand, tripling in size during that time. “We are happy to put this chapter behind us. Now we can focus on doing what we enjoy and do so well,” said a relieved Van Rixel.
Two years ago, to great fanfare, Chester Billingsley, Mentor CEO, announced he intended to invest $140 million in the cannabis industry. When news of Mentor's deal with Bhang became public in March 2014, Mentor's stock jumped from under $.50/share in mid January to almost $9 a share the day the Bhang deal was announced. Court records reveal Mentor made over $4.5 million in new stock sales while the Bhang deal was in play. However, since last year when the deal soured, Mentor's stock has mostly traded under $.50 per share and is down $.05/share, another 10% loss in value since the court decision was announced.
About Bhang, Inc.:
Bhang delivers the highest quality in medical cannabis products crafted from the finest in raw botanicals and ingredients. It provides transparency with precise and consistent amounts of cannabinoids in every one of its products. A six-time winner of the Cannabis Cup, it produces award-winning chocolates, vape systems, gum, and oils.