Grover Beach pot shop principal sues former partners, claims fraud

By KAREN VELIE

Besieged with allegations of pay-to-play, perjury, and illegal possession of marijuana for sale, the owners of 805 Beach Breaks in Grover Beach entered into an agreement to sell their business. And currently, a principal in the business alleges her partners, with assistance of city leaders, stole her portion of the marijuana retail store.

Fraud and theft are key issues raised in a lawsuit Wendy Cronin filed Wednesday in San Luis Obispo County Superior Court.

After proposition 64 passed in 2016, Cronin worried what would happen to her medical marijuana collective, The Herb Pantry, and came up with the idea of opening 805 Beach Breaks, Cronin said.

In late 2016, Cronin, Brian Touey and Erich Haas formed a partnership and began courting Grover Beach city officials to win one of three retail cannabis shop permits. At that time, Cronin was listed in city records as a principal in the business.

While Touey and Haas had the capital, according to the lawsuit, Cronin had the previous cannabis sales experience, which gave the company’s application more points for having a principal in the industry.

The lawsuit contends that in early 2018, Touey and Haas applied for a state license, without listing Cronin as a partner.

Shortly afterwards, in mid-2018, Cronin filed a $15 million claim against Mayor John Shoals, the Grover Beach City Council, city attorney David Hale and City Manager Matthew Bronson, for omitting Cronin from the city’s business permits.

Even so, city officials are not listed in the lawsuit, which includes Haas, Touey and 805 Beach Breaks as defendants.

Wendy Cronin

Meanwhile, allegations of criminal activity in the cannabis industry have plagued the South County city.

In Feb. 2019, Grover Beach Councilwoman Debbie Peterson resigned saying she could no longer be part of the city’s “pay-to-play insider’s game.” Peterson voiced concerns over allegations that some council members accepted bribes for their votes on cannabis retail store permits.

In March, deputies raided 805 Beach Breaks after discovering Touey was illegally growing cannabis in Santa Barbara County. Prosecutors charged Touey with felony perjury and two misdemeanor counts of illegal possession of marijuana for sale and illegal cultivation.

In a settlement with prosecutors, Touey agreed to give up his cultivation license and to pay $32,000, and the county agreed to drop all charges.

In August, Harvest Health & Recreation announced it had purchased 805 Beach Breaks.

Cronin is asking the court for a declaration that she was an owner of 805 Beach Breaks, for general and punitive damages, and for the cost of the suit.

“This action arises from Defendants’ wrongful and fraudulent actions, which were planned or orchestrated by Defendant Touey and Defendant Haas, in manipulating Plaintiff for their own benefit, to the harm and injury of Plaintiff,” according to the lawsuit.

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