New York-based vape company The Blinc Group Inc. filed for Chapter 7 in a New York bankruptcy court. The company’s petition cited at least $1 million in liabilities. CEO Arnaud Dumas de Rauly signed the form submitted on March 14.

The company appears to have not paid taxes, suppliers, media or public relations firms, based on the list of creditors included in the filing.

While plant-touching cannabis company cannot file for Chapter 7 bankruptcy protection, Blinc describes itself as a vaping technology company. Under Chapter 7, a trustee will attempt to liquidate the assets of the company in order to pay debtors.

Blinc is a private company and sells it products in 11 states as well as China. Last month the company introduced a new product called TUUN, billed as its first 2 milliliter all-in-one with variable voltage and pre-heat on-tap.

The company’s list of creditors includes some big names in the cannabis industry as well as others including:

• 7Thirty Fund LLC
• Arcview Collective Fund
• Arizona Department of Revenue
• Equitas Partners Fund
• Etain Health
• Florida Department of Revenue
• Georgia Department of Revenue
• GoDaddy
• Google
• Hubspot
• Illinois Department of Revenue
• U.S. Internal Revenue Service
• Michael Zaitsev
• Meltwater News
• Michigan Department of Treasury
• Microsoft
• New Jersey Department of Taxation
• New York Department of Taxation
• NisonCo
• Ohio Department of Taxation
• Oregon Department of Revenue
• Panther Opportunity Fund
• Politico
• WGD Opportunity Fund

In addition, several Chinese companies were listed as creditors to the company.

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Bright Green Corp. (OTC: BGXX) plans to file a voluntary petition for reorganization under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Florida in the coming days.

The company has seen much upheaval in the past few months and failed to achieve the big promises it laid out.

In December, Bright Green announced that its CEO, Gurinder Singh, resigned, along with board members Dean Deson, Robert Arnone and Dean Valore. In addition, Saleem Elmasri also resigned as the chief financial officer, leaving only Lynn Stockwell to run the company.

Board departures

At the time of the resignations, it was announced that now-CEO Stockwell wanted to restructure the company. Her plan was to on-shore the end-to-end active pharmaceutical ingredient (API) manufacturing back to the United States and position the company as the facilitator and supplier of plant-based controlled substances authorized to manufacture in the U.S.

The restructuring and new direction included canceling all the company’s existing contracts, expressed or implied; land purchase options; employment agreements; board member agreements; financing agreements; and warrants.

The company also said it would repay creditors of allowed general unsecured claims in the form of 20% in cash plus 80% in newly issued common stock,. Bright Green said it will issue new common stock to the existing holders of common stock after a 1-for-50 reverse stock split, such that their dilution is limited to the newly issued common stock to the creditors.

“Simply put, Bright Green Corp. was in an extraordinary unique position to produce, manufacture and research legal controlled substances, under registration and licensing with both state and the federal government,” Stockwell said. “The company was unable to take advantage of the opportunity and was compromised financially when globalization policies were not favorable for research, production and manufacturing within the United States. In addition, the past immigration policy made funding from the company’s EB-5 program for investment capital impossible”.

Big plans … again

Once it emerges from bankruptcy, the company said it will change its name to Drugs Made in America Corp. Bright Green said it plans to get revenue from “production and supply contracts and maintain its EB-5 investor program.”

According to the company, it will “seek to partner with Health and Human Services and designate scientific support for research at the existing facility in Grants, New Mexico, on a contract, cost-plus basis.”

Franchise plans

Bright Green also said it is exploring a franchise-based business model to build agriculture facilities in phases across western Texas, eastern Arizona and central New Mexico.

“Each facility will include 15-acre specialty greenhouses, constructed annually until market demand is met,” the company said.

The company expects to receive a federal loan guarantee for its 60 new megafarm owner/operators, who collectively will invest $3.5 billion to supply and strengthen the Drugs Made in America supply chain.

Bright Green never delivered

Green Market Report has previously written about Bright Green‘s big promises to investors that it ultimately never delivered upon. The company crowed about its approval to grow cannabis for research with a DEA license. It also claimed it had built a huge growing facility but had to return most of the equipment for failing to pay the vendor.

The company never delivered any cannabis for research and never reported any revenue. What it did accomplish was paying its executives generous salaries and taking out large credit lines. The company kept telling investors that harvests were on the horizon, but nothing ever materialized.

Eventually, the stock was delisted from the Nasdaq and lately traded on the OTC for roughly four cents a share.

The Empire Cannabis Club, known for its bold fight to keep open an unlicensed cannabis operation in New York City, has filed for bankruptcy. The Elfand Organization, also known as Empire Cannabis Clubs, filed for Chapter 11 in the Southern District of New York on Dec. 2.

Empire listed six addresses for the company and claimed its assets were in the $1 million to $10 million range. The debts totaled over $3.4 million and were outlined as follows:

• 424 Broadway lease $584,155
• BNN Fulton Flushing lease $327,642
• 833 Manhattan Ave. lease $201,108
• 268 Metropolitan lease $65,850
• NYSIF Workers Comp policy $95,369
• ADT security contract $8,152
• Spectrum $4,652
• ConEd $271
• Iakovos Inc. lease $12,000
• 172 Allen Realty lease $60,000
• Vlasic Labs products $4,137.50
• IRS Treasury Dept. taxes $5,058.83
• NY State taxes $250,157.78, $1,514,356.08 & $290,315.05

Empire’s legal state of mind

Green Market Report previously wrote that Empire Cannabis Clubs was suing New York closing its unlicensed cannabis stores which had operated since 2021. Empire’s five locations in New York City were raided on Aug. 29, with law enforcement officials entering each shop within the same 30-minute timeframe, owner Jonathan Elfand told Green Market Report. The New York Sheriff’s Department ordered all five stores closed as part of New York City’s Operation Padlock.

The Empire stores have remained closed since the raids, but the chain is still doing business via delivery for its roughly 196,000 members, Elfand said at the time. Elfand and Empire have never shied away from the fact that the five clubs have been providing members with high-quality marijuana goods, but the legal argument they’re relying on is that the business model is fully compliant under the 2021 state law that legalized recreational cannabis, the Marihuana Regulation and Taxation Act (MRTA).

“As long as you’re not profiting, you don’t need a license,” Elfand said. Empire has always operated as a not-for-profit organized under New York state law. “So at my club, all I do is I facilitate members to be able to acquire (cannabis goods).”

Details of how the club works are outlined on Empire’s website, but the basic business model revolves around a simple membership fee of $24.99 per month. With that monthly payment, Empire members can acquire cannabis from any of the clubs with zero markup. That, Elfand said, is the key to Empire’s legality.

Elfand also said that since its founding, it has paid “millions” in taxes to the state and city, the suit asserts and had a payroll of $3.2 million last year for roughly 75 employees. Gross sales at Empire reached $2.5 million in the second quarter of 2024, according to court records.

Operation padlock

Since that case was filed in September, a judge declared Operation Padlock unconstitutional in October for one dispensary called Cloud Corner. Cloud Corner was allowed to reopen but it wasn’t clear if that ruling applied to other unlicensed operations. This week, New York’s cannabis czar Dasheeda Dawson told Green Market Report that most of the unlicensed shops closed down by the New York City sheriff have remained shuttered, which has been a boon to the legal dispensaries.

“Operation Padlock continues. We meet on a regular basis … with the enforcement agencies. We’re at a point now where we’ve had success in really shutting down a good amount of the stores,” Dawson said. “Mostly, we’re not seeing those reopen.”

Elfand Organization LLC 2024Chapter 11 Petition