Cresco Labs and Green Thumb Industries have been fierce rivals since Illinois issued its first licenses to grow and sell medical marijuana in 2014.
Now, as the two River North-based firms battle for market share in states across the country, Cresco has filed a lawsuit accusing GTI of poaching a high-level employee who allegedly violated a non-compete clause in his contract when he switched sides this year.
The suit, filed Wednesday in Cook County court, claims the employee was recruited by another former Cresco employee who has allegedly been trying to lure others to GTI.
A GTI spokeswoman denied the allegations, saying the litigation is “aimed at preventing a former non-executive Cresco employee from finding a suitable career in the cannabis industry.”
“Instead of investing to retain current employees or support former employees through their transition following a recent sizable layoff, Cresco is spending money on lawyers to monitor and sue its former employees for finding new jobs,” the spokeswoman said in a statement. “This move is not only distasteful to their former employees looking to continue their careers in the cannabis industry, but also a total waste of Cresco’s capital and resources.”
Cresco and GTI cropped up as Illinois was rolling out its medical marijuana program, and they’ve both grown into publicly traded powerhouses with cultivation and retail licenses in multiple states. GTI reported $1 billion in total revenue last year, and Cresco reported earning $843 million.
The lawsuit states that Christopher Tonge, a chemist who served as Cresco’s director of technical services, notified the company in May that he was resigning. He then took what’s believed to be a similar job at GTI. Tonge had signed an employee agreement with Cresco that “barred him from working for a substantially similar company” for a year.
Tonge was integral to developing “a unique process” to extract cannabis oil from pot plants that “helps drive revenue while enabling significant cost savings,” according to the suit. “The process provides such value to Cresco that it has applied for two patents on it, on which Mr. Tonge is a co-inventor,” the suit notes.
Tonge was allegedly recruited to GTI by Matt Ingram, its senior vice president of operations. Ingram previously worked at Cresco and has knowledge of the firm’s manufacturing operations and its contractual non-compete provisions, the suit states.
Meanwhile, Ingram has been reaching out to other Cresco workers “and urging them to resign to work for GTI, despite knowing that these employees are subject to covenants not to compete,” the suit holds. Cresco CEO Charlie Bachtell even confronted his GTI counterpart, Ben Kovler, in April and warned him that Ingram was attempting to hire “multiple senior-level employees” from Cresco.
Filed by Cresco subsidiary JDRC Managed Services LLC, the suit names Tonge, Ingram and GTI-Clinic Illinois Holdings LLC, a subsidiary of that company. It accuses Tonge of breaching his contract and holds that GTI and Ingram intentionally interfered with his employment agreement.
Cresco is seeking an injunction enforcing the terms of Tonge’s non-compete clause, damages and other relief.
