Cannabis Musings - February 18, 2026

A case.

Friends – every once in a while, a story comes into Cannabis Musings headquarters that’s simply perfect. We get all verklempt when a loyal reader tips us off to one of these ‘just so’ stories, and today, we’ve got one.

We’ve talked a lot about The Cannabist Company, née Columbia Care, over the past few years, following its unfortunate decline since its heights during the salad days of US licensed cannabis. Columbia Care distinguished itself by focusing more on medical cannabis, keeping it a little more under the radar compared to some of its more growth-aggressive peers. At the time of its IPO in spring 2019, it enjoyed a market capitalization of about $1.4bn, having generated about $12.9mm in sales in the first quarter of that year. It was a heady time.

Fast forward three years later, when Columbia Care announced a blockbuster merger with Cresco Labs, in a deal valued at about $2bn. There had been some big deals in that post-frenzy period – Trulieve x Harvest, Verano x Goodness Growth, TerrAscend x Gage – with US cannabis companies having seen a lift in revenues from pandemic sales, but this particular chasseneh (“marriage”) stood out not just for its size, but also because they announced that, to get the deal done, they were going to divest about $185mm of cannabis assets to Sean “Diddy” Combs. The less said about that, the better.

But the deal got stuck in regulatory limbo, and a year later, investors and the press were starting to wonder if the merger would ever close. And indeed, in July 2023, Columbia Care and Cresco called off the deal. As was noted, time has a way of crushing transactions: “Cresco’s market capitalization is about $700 million, down from about $2.7 billion when the deal was announced. Columbia Care has a market cap of about $200 million.”

This is all background for an interesting case that just got decided up in British Columbia involving the former CEO of Columbia Care, Nicholas Vita. The opinion itself is a quick read, and it’s been summarized in press reports, but the upshot is that the company’s erstwhile CEO borrowed money from Cannacord Genuity Corp., a Canadian financial services firm, against his Columbia Care stock, and didn’t pay most of it back, so Cannacord sued and won.

Fairly humdrum, but the details are what make this so interesting. As the opinion notes, Cannacord closed the Columbia Care IPO, and fairly quickly afterwards, Mr. Vita approached Cannacord about borrowing against his Columbia Care stock. This is not that unusual, because it’s not easy for CEOs to divest (sell) their company’s stock. There’s not only regulatory and timing restrictions, but senior executives usually have to report their stock holdings and sales to the public, which may drive the price down, so there’s the optics to consider as well. One way to bridge that gap is through what’s known as a “margin loan,” which is lending against publicly-traded stock. These kinds of loans are governed in the United States by the very boring Federal Reserve Regulation U, which generally limits lending more than 50% against the value of the stock pledged. This cap came about after the 1929 stock market crash, which was caused in part by way too generous margin loan terms.

Public companies have mixed feelings about their senior executives using margin loans to get some liquidity on their somewhat illiquid stock holdings, because it creates a bit of a tension between the fiduciary duties the executive has to the company’s stockholders and their own financial interests if the stock price drops. That’s why directors’ and officers’ liability insurance carriers typically ask their public company executives and boards if they’ve pledged stock for loans – it’s a risk. Nonetheless, in many situations, it’s a compromise that works.

So, Cannacord takes Columbia Care public and Mr. Vita understandably wants to take advantage of elevated cannabis stock prices. Unfortunately, as the opinion notes, US regulations prohibited Mr. Vita from opening a margin loan account directly (although the opinion doesn’t tell us why). So, Mr. Vita transferred stock into an account opened in the name of Amaranthus, the family trust of Michael Abbott, Columbia Care’s Executive Director and Chairman. Amaranthus, an edible flowering plant, also happens to be known by the name “pigweed.” The less said about that, the better.

Mr. Vita also signed a personal guarantee: “Under its terms, he unconditionally guaranteed the payment and performance of all present and future debts and liabilities of Amaranthus arising on default under the Account.” That’s fairly typical of a margin loan. Shortly after signing in June 2019, he funded about CA$69mm of stock (about US$52mm) and borrowed about US$11.3mm of loans, which were sent to a Connecticut law firm. There were more loans, and more stock pledged, so that, by early January 2020, the account held about CA$127mm of stock (about US$98mm) against US$14mm of debt. That was an extremely well-collateralized margin loan.

Unfortunately, Columbia Care’s stock price didn’t go up:

At some point in 2020, the opinion dryly notes that “the CC Share price fell such that the margin ratio in the Account was below the requisite level in the Undertaking.” They don’t tell us that ratio of stock value to loans, but it couldn’t have been that high. Cannacord appears to have made Mr. Vita sell off shares over the next few years – pausing while the Cresco merger was in play – but waited until October 18, 2024, to finally demand payment and call the personal guarantee. Now, the facts aren’t fully laid out whether the account was “out of ratio” the whole time, but it kind of raises the question of why Cannacord waited so long (usually, the answer is “the relationship”).

Well, Mr. Vita refused to pay on the guarantee, raising a number of defenses, including arguing that Cannacord waited too long (which the court didn’t accept), and, our favorite defense here at Cannabis Musings, illegality:

Mr. Vita says the complex factual and legal issues raised by his illegality defence are not suitable for determination by summary trial. … The undisputed evidence is that Canaccord could not, under US law, solicit or open a margin account for Mr. Vita because of his American citizenship and Canaccord not being a registered broker/dealer in the US. Nor could it open such an account through one of its US affiliates because cannabis company shares cannot be used as collateral in America. Mr. Vita submits that Canaccord’s response to these obstacles was circumvention, by a sham arrangement whereby the Account was created for Canaccord to loan money to Mr. Vita using his Columbia Care shares as collateral. Thus, Mr. Vita says he was the “true borrower” of the Canaccord loans.

The sheer chutzpah is impressive – you lent me this money illegally, so you can’t enforce the guarantee I signed to try to collect back the illegal money you gave me.

In resisting enforcement of the Guarantee, Mr. Vita relies on the doctrine of ex turpi causa (no remedy from wrongdoing) which can prohibit a plaintiff from obtaining remedies for losses related to their own illegal conduct.

“ex turpi causa.” Drop that your next dinner party. Well, to conclude this cautionary tale, the court wasn’t buying any of that and found for Cannacord to the tune of US$7.4mm. Vellen zein kliger fun alleh iz di gresteh narishkeit. (“Trying to outsmart everyone is the greatest folly.”)

This case tells us a lot about the nature of high finance. For better and for worse, it’s powered by relationships and trust, and not wanting to rock the boat until you absolutely have to. That’s the nature of risk-taking, even for relatively conservative financial institutions. It also shows how many within the industry got caught up in the speculative frenzy of cannabis stocks in that 2017-2019 period – not just stock traders, but also financial institutions, founders, and executives. It was a different time.

Be seeing you.

© 2026 Marc Hauser. None of the foregoing is legal, investment, or any other sort of advice, and it may not be relied upon in any manner, shape, or form. The foregoing represents my own views and not those of Jardín, B&Y Ventures, or anyone else who employs/hires me.

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