In downtown Bay City, a Mercedes-Benz with Wisconsin plates sat idling for hours with two men inside, unconscious and mouths agape. When police responded, they discovered the vehicle filled with cannabis products valued at nearly $100,000, along with an assault rifle and a handgun.
The cannabis haul, as it turned out, originated from a defunct Bay City dispensary that had reported to state regulators that its inventory was destroyed. How the two men from Wisconsin obtained the product remains unclear, but they now face a dozen charges between them.
This marks at least the third time this year that one of the men has been arrested on cannabis-related charges outside his home state. In a previous incident, he was arrested for allegedly lighting a cannabis joint near the baggage terminal of a Florida airport.
The incident began on July 16th, when police were dispatched around noon to the area of Second Street and Washington Avenue near the former Prime Event Center in Bay City. The report concerned two men slumped over in a parked white Mercedes-Benz, which was still running.
When officers approached the vehicle, they noted the back seat was "filled to the roof" with black garbage bags. Upon knocking on the windows, the driver, Caleb J. Trostle, woke up and claimed he and his passenger were just sleeping. The passenger, Jaden M. Spatz, struggled to keep his eyes open and spoke incoherently, according to police reports.
Trostle, 27, told officers that he and Spatz, 22, were in town for walleye fishing and were simply tired. Spatz refused to identify himself.
When Trostle provided a false name and birthdate, officers arrested him. Trostle, who was carrying $778.12 in cash, declined to speak further after being read his Miranda rights.
Spatz was also detained and taken to jail, where his condition worsened, prompting officers to take him to McLaren Bay Region hospital. During a search of the vehicle, officers found an open alcoholic beverage in the center console, a loaded Smith & Wesson 9mm handgun in the console, a loaded PTAC AR-15 rifle, 41 vacuum-sealed bags each containing about one pound of cannabis flower, hundreds of THC gummies, vapes, tinctures, and 12 jars of THC-infused peanut butter.
In the trunk, officers discovered burglary tools, including an angle grinder, hammers, prybars, wrenches, pliers, and a welding helmet.
Two construction workers in the area had reported the idling car with the unconscious men inside around 9:30 a.m. Police later confirmed with the state's Cannabis Regulatory Agency that the THC products came from a Bay City dispensary that had closed down and reported its inventory destroyed on June 15th.
When contacted, the dispensary's landlord stated that the owner had not paid rent for over a year and had been unresponsive. The owner, living in Canton, declined to speak with police regarding a possible break-in.
The day after his arrest, Spatz made a phone call from the Bay County Jail to a woman in Wisconsin, claiming he had been set up. The woman, however, expressed no sympathy, questioning him about the cannabis and criticizing his lack of caution.
Police estimated the total value of the 37.36 pounds of cannabis flower and other THC items at $82,181.26.
Both Trostle and Spatz have been arraigned in Bay County District Court on six charges each, including manufacturing between 20 to 200 cannabis plants, carrying a dangerous weapon with unlawful intent, carrying a concealed weapon, possession of a loaded firearm in a vehicle, and two counts of felony firearm.
The most serious charge, related to cannabis manufacturing, carries a maximum penalty of seven years in prison. A felony firearm conviction requires a minimum two-year prison sentence served consecutively to any related sentence.
As of August 14th, both men remain in Bay County Jail on $150,000 bonds.
Spatz was previously arrested on March 29th in Okaloosa County, Florida, after allegedly lighting a cannabis cigar at an airport baggage terminal. By June 12th, he was arrested again in Porter County, Indiana, on additional cannabis and gun-related charges. After posting a $1,500 bond, Spatz failed to appear for a July 23 court hearing as he was already in custody in Bay County.
Both men are scheduled for a preliminary examination on August 27th.
After reviewing maps outlining potential properties in the commercial and industrial districts that could qualify for recreational cannabis businesses, the Bronson City Council decided on Monday to delegate the issue to the Planning Commission for further consideration.
The topic of allowing recreational cannabis businesses in Bronson has been under discussion for over a year, but no formal decisions have been made by the City Council to date.
City Manager Brandon Mersman noted in his report that the City of Coldwater's GIS Department assisted Bronson by creating the maps used in the discussion. These maps illustrated which properties would be eligible for cannabis businesses at buffer zones of 200, 500, and 1,000 feet.
Council President Matt Watkins suggested that both the revenue potential from such establishments and the eligibility maps should be thoroughly reviewed by the Bronson Planning Commission.
Following Michigan voters' approval of recreational cannabis in November 2018, the Bronson City Council chose to opt out two months later. However, communities that opt out retain the option to opt in at any time.
A lawsuit alleging that a Michigan township unlawfully blocked the establishment of a cannabis dispensary has been settled. The parties involved, including a cannabis entrepreneur and local developers, have agreed to resolve the case against the township.
U.S. District Judge Susan K. DeClercq dismissed the case with prejudice following a joint motion for voluntary dismissal filed by the township of Lima and the group known as Citizens of Lima for Cannabis. The motion was submitted on August 5, and the judge issued the dismissal order the next day.
Originally filed in March, the lawsuit claimed that Lima's board of trustees engaged in a prolonged effort to prevent the opening of a cannabis dispensary. The complaint highlighted the involvement of several local entrepreneurs and real estate developers as well as Andrew Sereno, CEO of Michigan-based Glacier Cannabis, as key figures in the effort. The lawsuit accused the township of violating both the 14th Amendment and Section 1983 of the U.S. Code, which protect against civil rights infringements.
Details regarding the settlement agreement have not been made available in the court records.
Both the legal representatives for Citizens of Lima for Cannabis and the township of Lima declined to comment on the resolution of the lawsuit.
Voters in Niles Township are set to determine in November whether cannabis businesses will be permitted in their community.
The Niles Township Board of Trustees has decided to place the issue on the upcoming ballot. If voters approve the measure, the current ban on cannabis establishments in the township will be lifted, allowing for the establishment of four cannabis businesses along Eleventh Street, south of Fulkerson Road.
In 2019, the township board chose to opt out of the state law that permitted recreational cannabis businesses. However, the success of cannabis businesses in other Southwest Michigan communities has prompted the board to revisit the decision.
If Niles Township approves the presence of cannabis businesses, the community could receive approximately $59,000 annually for each licensed cannabis dispensary from the state's Marihuana Regulation Fund.
A Montana intellectual property attorney and his wife, attempting to recover losses from an alleged investment scam, have mistakenly targeted a Michigan cannabis company that was also a victim, according to the company's statements on Wednesday.
Cherry Industries LLC, a cannabis company based in Michigan, has initiated a lawsuit in federal court. The suit contends that false information has been disseminated through social media and misleading "tips" have been sent to Michigan cannabis authorities.
The legal action comes after a series of incidents involving a man who allegedly posed as a "highly successful entrepreneur," deceiving both Cherry Industries and the couple, Brian Pangrle and Silvia Marie Lazo. According to the lawsuit, both parties lost money investing with Lalit Kumar, who also used the alias Lalit Verma. Kumar's real identity remains uncertain due to the use of multiple passports and identities.
"Despite being caught up in one of the same Kumar/Verma schemes that damaged Cherry's own owner, even as defendants struggled to obtain justice through their putative class action they turned their sights on Cherry," the complaint stated. Pangrle and Lazo had filed a class action lawsuit in February 2021, accusing Kumar of defrauding investors. However, the case was halted after one of Kumar's businesses declared bankruptcy in October 2021.
Cherry Industries claims that Pangrle and Lazo have embarked on a "years-long scorched earth campaign" against them, mistakenly believing that targeting Cherry would harm Kumar/Verma. The lawsuit details how Kumar approached Cherry as a potential investor, claiming to have significant funds tied up in Chinese businesses. He managed to become involved with Cherry, convincing its owner, Clint Cerny, a former automotive executive, to invest in a personal protective equipment company, Future Health Technology LLC, at the start of the COVID-19 pandemic.
Kumar's promises about innovative protective face masks produced by Future Health were allegedly false, leading to significant financial losses for investors. Cherry Industries claims Kumar falsified scientific claims about the masks, pocketed the investments, and declared bankruptcy to avoid liability. Both Future Health and another of Kumar's companies, Redcliffe Medical Devices Inc., were registered at the same address in Southfield, Michigan.
Cherry Industries also asserts that they were named in a February 2021 Chapter 7 bankruptcy petition for Redcliffe. Kumar's attorneys falsely claimed to represent Cherry in these proceedings. The lawsuit notes that Lazo is listed as an unsecured creditor in the Redcliffe bankruptcy documents, which list numerous individuals financially involved with Kumar's face mask ventures.
Since late 2020, Pangrle and Lazo have allegedly implied or stated to third parties that Kumar/Verma owned or controlled Cherry Industries, accusing the company of being part of Kumar's fraudulent activities in widely shared social media posts. Cherry also claims that Pangrle and Lazo have repeatedly contacted the Michigan Cannabis Regulatory Agency, misleading regulators about Cherry's ownership. The cannabis industry requires clear and vetted ownership due to its heavy regulation, making these accusations particularly damaging.
Furthermore, Pangrle and Lazo have allegedly made false claims on social media that Cherry Industries uses the herbicide glyphosate in cannabis cultivation, suggesting the company's products are tainted or unsafe. Cherry Industries denies these allegations and argues that these falsehoods have caused substantial damage to their reputation and operations.
Cherry Industries is pursuing legal action for defamation, injurious falsehoods, and common law conspiracy. Brian Pangrle, a practicing intellectual property attorney based in Burbank, California, is licensed to practice law in California, New Mexico, and the District of Columbia.
The competition between Michigan and California in the cannabis industry extends beyond regulated recreational sales. Michigan's operators also rank high in terms of unpaid invoices, posing significant financial challenges within the market. According to Brett Gelfand, managing partner at Cannabiz Collects and founder of the Cannabiz Credit Association, Michigan is emerging as one of the most problematic states for unpaid debts in the regulated cannabis industry.
Gelfand noted that while Oregon and Colorado were previously significant markets for debt collection, many companies in those states have been "weeded out," leading to a decrease in collection activity. However, new markets like Michigan are increasingly contributing to the issue.
Whitney Economics, an Oregon-based cannabis data and research company, forecasts that delinquent payments in the U.S. cannabis industry could exceed $4 billion in 2024.
A primary factor contributing to unpaid invoices in the cannabis industry is the lack of access to traditional banking and capital. Unlike other businesses, cannabis operators often cannot obtain credit cards or standard operating capital. This forces them to rely on trade credit, effectively making them act as banks without the necessary expertise or safeguards.
When cannabis companies extend net-15 or net-30 terms, they take on the role of financial institutions but without the recourse available to banks, such as credit checks or liens. This puts them at a disadvantage, as they feel compelled to extend credit to secure sales, risking financial instability.
The retail sector is most notorious for nonpayment, triggering a domino effect across the supply chain. Retailers' unpaid debts affect producers and brands, which in turn delay payments to testing labs and other service providers. Larger ancillary companies, such as grow-supply and lighting businesses, are generally more cautious and less likely to extend credit freely due to their experience in the industry.
To mitigate financial risks, cannabis companies should implement several best practices:
Dedicated Collections Role: Assign someone responsible for collecting payments to ensure accountability and follow-through.
Clear Policies and Procedures: Document and enforce a comprehensive policy for managing accounts receivable.
Customer Analysis: Evaluate a company's creditworthiness before extending credit terms.
Onboarding Agreements: Use legally reviewed agreements with default clauses to protect against nonpayment.
Personal Guarantees: Secure personal guarantees for significant credit extensions to safeguard against default.
With many retail chains struggling financially, vendors are often left with little recovery, emphasizing the need for these protective measures.
Many cannabis operators hesitate to report default accounts to collections due to concerns about their reputation. They fear being perceived negatively in the industry. However, Gelfand argues that this mindset needs to change. Not fulfilling payment obligations can lead to severe consequences for other businesses, potentially causing them to fail.
Operators must also be cautious about informal reporting through Facebook or WhatsApp groups dedicated to exposing delinquent companies. While well-intentioned, these groups can violate antitrust laws, especially if they deter sales to specific businesses. It's crucial for industry participants to share information in a regulated manner to avoid legal repercussions.
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