Brothers Ross and Zach Lipson are suing Dutchie management, claiming they were wrongfully ousted from the company they founded and grew into one of Oregon’s most notable cannabis businesses.
Ross Lipson was CEO and Zach Lipson chief product officer and both were on the board at the Bend-based e-commerce technology provider, which raised some $600 million in venture capital.
Dutchie announced early this month that the brothers “departed after a long tenure of driving growth, passion and innovation in the cannabis industry.”
Tim Barash, who had been Dutchie’s executive chairman, was appointed CEO with the support of directors from key investors Gron Ventures and Casa Verde, according to a Dutchie news release.
But in a Dec. 7 lawsuit in Delaware Chancery Court, the Lipsons charged they were victims of a “blatant ambush” by Barash and the other directors. According to news reports, the suit alleges the board conspired to oust the Lipsons “for cause,” remove them as directors and rewrite shareholder voting agreements to install Barash.
The suit asks for a declaration that the moves were invalid and reinstates the brothers to their former executive and board positions.
Dutchie’s chief legal counsel told Forbes the brothers’ charges were “absolutely without merit.”
Forbes also reported it was provided a text sent from Ross Lipson to Barash sent in late November as the drama was unfolding saying, “This moves makes sense …. I’m excited to pass the torch.”
While Dutchie proved a powerhouse at raising funding and has thousands of dispensaries using some form of its technology, it has not been immune to recent industry woes. In June it said it laid off 8% of its workforce (the company had earlier reported 718 total employees in a Business Journal survey, with 129 in Oregon).
Within weeks of that announcement, reports emerged that some Dutchie investors were looking to get out of the company at a valuation well under the $3.7 billion that was attached to a $350 million funding round in fall 2021.
In a July interview with the Business Journal, Zach Lipson brushed aside those reports.
“The company is in a strong position,” he said. “We’re continuing to see growth month by month and frankly any reports that our valuation has change are false. We’re in a healthy position and we’re taking big, new exciting products to market, with more to come.”
