The viability of one of Berkeley’s recently approved cannabis dispensaries is in jeopardy because its landlord is refusing to allow it to move into its planned Shattuck Avenue location.
BTHHM Berkeley LLC, which owns The Apothecarium, filed a lawsuit May 30 against Stewart L. Johnston, the owner of 2578 Shattuck Ave. (at Parker). The lawsuit contends that Johnston is in breach of contract because he is not allowing the cannabis business to take possession of the property, even though the parties signed a letter of intent in 2015, and The Apothecarium has paid more than $145,000 in rent since then.
One of Berkeley’s requirements for a cannabis permit is the acquisition of a location for a dispensary. As Johnston is not allowing The Apothecarium to move in, the company is in danger of losing its permit, according to the lawsuit. The company has already spent two years and paid out a total of $400,000 for rent, permit fees, lobbyist and consultant fees associated with obtaining a permit.
Neither Johnston nor the attorney for The Apothecarium returned Berkeleyside’s calls for comment.
According to the lawsuit, Johnston hired Landmark Real Estate Company in 2011 to market 2578 Shattuck Ave. Johnston, the owner of Johnston Medical and Orthopedic Supply Company, owns many properties around Berkeley. Around Feb. 19, 2015, The Apothecarium’s “predecessors-in-interest” and Johnston signed a letter of intent, according to the lawsuit, whereby the cannabis company would pay $1,600 in rent a month to “hold” the 1,600-square-foot-property. If Berkeley approved The Apothecarium’s application, the two parties would then sign a lease, according to the suit, and the rent would increase to $3,200.
The letter of intent specified that the premises would be used for a medical cannabis dispensary, according to the suit. Later on, the two parties agreed to increase the size of the rental space to 3,300 square feet for a monthly rental of $6,400.
But even though Berkeley awarded a medical cannabis permit to The Apothecarium on Sept. 20, 2016, Johnston has refused to allow the company to take possession of the property, according to the lawsuit. The company has paid him $145,000 in rent since 2015, and has placed $25,000 in escrow for the rent of the past few months.
“The sole reasons the parties have not executed a lease yet … is because Johnston has unilaterally decided he does not want to lease the premises for use as a dispensary,” according to the lawsuit…. Johnston happily accepted rent from BTHHM for over 18 months during the approval period, knowing full well BTHHM’s intended use, but once BTHHM obtained the permit, Johnston reversed his position and acted at all times in bad faith with the singular goal of ensuring a lease is never executed,” reads the lawsuit.
In addition, since the permit was issued, Johnston has made new demands, such as asking that The Apothecarium pay $12,600 in rent per month rather than $6,400; pay a $50,000 security deposit rather than $12,800; require the cannabis company to pay for added fees, including property taxes; and bring the building up to code, which would cost $700,000, according to the lawsuit.
If The Apothecarium can’t move in and has to find a new space, it might lose its permit, the suit contends.