iAnthus Capital Holdings, Inc. (OTCQX: ITHUF) Chief Executive Officer Hadley Ford has resigned from his position after an investigation by the board’s special committee. The company’s President and Co-founder Randy Maslow has been appointed as the interim CEO effective immediately.

Investigation

The company formed a special committee to look into allegations made in an online media report that Hadley had misused company funds for his own benefit and that there was a conflict of interest. The committee determined that two of the allegations were substantiated and recommended further action.

According to a company statement, the Special Committee determined that Ford entered into two undisclosed loans (one loan for $100,000 with a related-party and the other for $60,000 with a non-arm’s length party) and those loans created a potential or apparent conflict and should have been disclosed to the board in a timely way.

With respect to the loan with the related-party report that started everything suggested that Ford entered into an undisclosed loan transaction with the managing member of iAnthus’ senior secured lender, Gotham Green Partners.  The Special Committee considered the allegation and the relevant details, are summarized as follows:

• On December 20, 2019, iAnthus and Gotham Green closed an additional US$36.15 million of senior secured convertible notes from Gotham Green and additional co-investors.
• A day after the close of the Third Tranche, on December 21, 2019, Ford and the Managing Member (as lender), entered into a loan for the principal sum of $100,000 documented by an email. The loan bore no interest and was to be repayable on March 31, 2020. The loan has not been repaid.

The Special Committee said it did not find a basis to conclude that “Ford’s conduct in the face of the potential or apparent conflict impacted the terms, timing, or negotiations the Company had with the related-party or the non-arm’s length party.  Nevertheless, the Special Committee concluded, and the Board accepted, that the failure to disclose such personal loans to the Board was a breach of the Company’s conflict policies and other obligations as an officer and director of the Company.”

Elizabeth (Beth) Stavola, Chief Strategy Officer and director of iAnthus stated: “I look forward to working closely with Randy as interim CEO and the Special Committee as the Company explores strategic alternatives.” iAnthus has initiated a Strategic Alternatives Review Process and has hired Canaccord Genuity Corp. as its financial advisor.

Earnings Delayed

iAnthus has postponed the filing of its annual financial statements for the year ended December 31, 2019, to incorporate subsequent event disclosures as they relate to the company’s financial position. The earnings announcement had previously been scheduled for April 7, 2020. As a result of a change to the filing date, the Company’s earnings news release for the fourth quarter and full-year 2019, as well as the conference call for financial analysts and investors previously scheduled for April 7, 2020, is being rescheduled.

iAnthus owns and operates licensed cannabis cultivation, processing and dispensary facilities throughout the United States, providing investors diversified exposure to the U.S. regulated cannabis industry.