Silverpeak Holdings operated this cannabis cultivation facility in the Basalt region for about five years before abandoning it in June. In the past three weeks, two lawsuits against the company and its founder have been filed in Pitkin District Court.
An investor in Silverpeak Holdings is seeking a court order to inspect the cannabis company’s books after it put its stores up for sale in May and broke a long-term lease at its Basalt cultivation facility in June.
In the second civil trial against the company in Pitkin County District Court in three weeks, plaintiff Orland Mark Brown claims his requests for a review of Silverpeak Holdings’ financial picture were ignored.
Attorney Michelle Schindler of the Ferguson Schindler law firm in Aspen said the lawsuit was filed Wednesday after Brown’s attempts to contact the company’s principal, Chapman Ducote, went unanswered. Silverpeak Holdings and Ducote, who allegedly recruited Brown as an investor, are named as defendants.
Ducote, a businessman and professional race car driver with homes in Miami and the Aspen area, said he read Brown’s complaint on Friday. He denied the allegations.
“Mr. Brown is making allegations that are not true,” Ducote said in a telephone interview, “and I will immediately sue him for damages.”
Brown’s lawsuit alleges that he invested $2 million in Silverpeak Holdings in 2019, which Ducot “purportedly intended to create one of the largest vertically integrated cannabis licensing companies in Colorado by acquiring cultivation facilities, marijuana processing equipment, and establishing retail locations in the adult-use and medical cannabis space,” the lawsuit states.
In 2019, Ducote invested in the purchase of Silverpeak, founded by entrepreneur Jordan Lewis, who opened Silverpeak Apothecary in Aspen in March 2014 and operates a cultivation facility. Silverpeak and Stash, which are no longer operating, were the first stores in Aspen to sell recreational marijuana.
Brown’s lawsuit follows another lawsuit, also filed Aug. 12 in district court, alleging that Silverpeak Holdings breached its lease when it abandoned its Basalt cannabis facility in June. Ducot is also a defendant in the suit.
Located at 24480 Highway 82 and completed in 2014 as High Valley Farms, the 4.7-acre property includes a 19,925-square-foot warehouse, a 5,075-square-foot office building and a 2,536-square-foot residence, according to county records. The company also voluntarily surrendered its license to operate a marijuana cultivation facility on the property, according to the state Division of Marijuana Enforcement.
The lease breach lawsuit was filed by the landlord, Basalt Real Estate LLC, an affiliate of Des Moines, Iowa-based Hurd Real Estate, which buys, sells, develops and leases commercial properties. Basalt Real Estate acquired the Silverpeak property in a $9.3 million sale-leaseback deal that closed in December 2020.
Silverpeak owned the property for a year and acquired it in December 2019 for $8.35 million. Ducote and Silverpeak were served with the complaint on Aug. 22, according to court records.
“We’re working on it,” Ducote said, noting that he met with Hurd Real Estate on Friday. The farm’s inventory has been distributed to stores Silverpeak operates in Colorado, he said.
In May, prior to exiting Basalt Farm, Silverpeak began marketing efforts to sell its seven Colorado stores and cultivation facility operations (not the property itself).
“The business is for sale and we have several interested parties,” said Ducote. “The market is difficult and we believe that it is a good time to sell.”
Brown’s suit alleges that the owners of Silverpeak’s membership interests were not required to approve the Basalt plant before vacating it. Nor were they asked for permission to sell the stores, the suits allege.
“Due to the sale of the property and the lack of communication,” the suit says, “Brown became concerned about Silverpeak’s financial condition and operations.”
Brown’s request for a mandatory court order requires him to review Silverpeak’s records and tax returns for the past five years, the company’s debt documents, financial statements, minutes of board and investment meetings, and other records.
“Defendant refused to provide an accounting of the amount owed to Brown,” the complaint states. “Therefore, Brown is asking the court to order an accounting of Silverpeak’s finances.”
Ducote declined to say whether he would grant Brown’s request to review Silverpeak’s financial picture.
“We will address their allegations in their counterclaim and we will also address those allegations in our counterclaim,” he said.
The breached lease and investor claims do not affect the operational status of the Silverpeak store in Aspen and six other stores in Colorado called The Dab by Silverpeak. Four of those dispensaries are located in the front row. Glenwood Springs and Parachute also have Dab by Silverpeak retail locations.
