Antitrust Conspiracy|Alleged for Marijuana

WAUKEGAN, Ill. (CN) - A Denver businessman is trying to monopolize the medical marijuana market in Illinois, a competitor claims in an antitrust complaint.

Medponics Illinois sued Kayvan Khalatbari and his "cannabis cultivation center" operators, Denver Relief and Denver Relief Consulting, on May 18 in Lake County Court.

Medponics claims that in trying "to skirt the regulations and limitations regarding maximum cultivation center permits imposed by the [Illinois Compassionate Use of Medical Cannabis Pilot Program] Act, the rules, and other applicable law, Khalatbari has deprived plaintiff of all opportunity to operate a cannabis cultivation center in Illinois."

The Waukegan-based plaintiff says it paid the $25,000 fee and submitted an application for a permit to operate a medical cannabis cultivation center in Zion, Ill.

Its application included plans for "state-of-the-art hydroponic greenhouses with 100 percent controlled closed-loop environments to produce consistent quality cannabis with minimal contamination (e.g., pesticides, herbicides, harmful microbes). This proven technology is used internationally by pharmaceutical companies, for their tightly controlled medicinal cannabis cultivation." (Parentheses in complaint).

But Medponics didn't get a permit. The state Department of Agriculture gave permits to two LLCs connected to Khalatbari - Progressive Treatment Solutions and Cresco Labs.

Medponics claims the fix was in: that Khalatbari and had "infiltrated the Illinois medical cannabis field with the intent of eventually monopolizing it." It says Khalatbari did this by becoming a board member for the Illinois Cannabis Industry Association.

Though the defendants "knew, prior to the department's rules becoming effective, that the rules intended to limit the number of cultivation center permits per individual to three,"

Khalatbari and his consulting firm "were able to position themselves to circumvent the Act and the rules and have in fact circumvented the Act and the rules," Medponics claims.

On April 13 Medponics sought a temporary restraining order against Progressive Treatment Solutions, telling the court of Khalatbari's role with the firm.

"That very evening, PTS rewrote DRC's role on their website and removed references to Khalatbari," Medponics says, referring to Progressive Treatment Solutions and Denver Relief Consulting.

Medponics claims that DRC and Khalatbari are both "involved in the daily operations and have established an ongoing relationship with both Cresco Labs through Khalatbari's position as CEO and at PTS through Nick Hice, an agent and employee of DRC."

Medponics asks the court to compel the defendants to disclose all cultivation center applications and contracts between or among themselves, Cresco Labs, and/or PTS.

It also seeks declaratory judgment and damages for monopoly and attempted monopolization, civil conspiracy, fraud, and tortious interference with prospective economic advantage.

Khalatbari is the CEO of Cresco Labs, and "an advisor in name only" for Progressive Treatment Solutions, according to the complaint.

Medponics is represented by Kathleen McDonough and Dan Alexander with Segal, McCambridge, Singer & Mahoney.

The defendants did not immediately respond to requests for comment.

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