#cannabislaw – “A California federal judge is not happy with the way a cannabis industry banking firm has been behaving during discovery in a dispute accusing it of withholding funds from a client, and he has told Pacific Banking Corp. that “sanctions are going to fly.”….

The dispute landed before Judge Donato in March 2020, when Cann Distributors accused Pacific Banking of failing to make millions of dollars in tax payments to the state of California on its behalf, as well as failing to pay vendor invoices. The company also secured an order blocking Pacific from touching the roughly $2.8 million Cann said it had deposited with the marijuana-friendly financial institution, a middleman of sorts between cannabis companies and traditional banks.

After a short back-and-forth at the hearing, Judge Donato’s ire landed on Pacific Banking. The hearing was called because Cann Distributors said lawyers for Pacific Banking made outright denials — for example, regarding whether it had made certain payments — during the request-for-admissions process, but later during interrogatories said they didn’t have enough information to answer the same questions.

An attorney for Pacific Banking, Stephen M. Lobbin of SML Avvocati PC, said: “Perhaps there was a collation error on my part.”

“Don’t say ‘perhaps.’ Own it. Own it. You didn’t do the right thing,” Judge Donato responded. “And we’re here today, burning my time and my scarce judicial resources â€” I’ve got 400 other cases that are more deserving [of] attention than this, which is our fifth or sixth round of these discovery disputes, which are largely because you on the defense side are a rock in the gears of this court.”

Judge Donato accused Pacific Banking of “outright gamesmanship” and told the company, “The hammer is going to drop all on you.””

https://www.law360.com/california/articles/1530019/sanctions-will-fly-in-cannabis-bank-discovery-dispute?nl_pk=87a814fe-acbd-41b5-9dff-8f51227935f5&utm_source=newsletter&utm_medium=email&utm_campaign=california&utm_content=2022-09-16