Lawsuit Filed Against East Liverpool Marijuana Plant Owner

EAST LIVERPOOL, Ohio – A lawsuit seeking more than $2 million has been filed in Columbiana County Common Pleas Court against FRX Real Estate Holding Co. of Ohio LLC by the general contractor who worked on its new medical marijuana cultivation and processing plant in East End.

According to court dockets filed Jan. 26, Palmer Construction Co. Inc. of McConnellsburg, Pa., says FarmaceuticalRX LLC, an affiliate of the holding company, failed to pay the construction company for work performed.

Palmer Construction served as general contractor on two projects at FarmaceuticalRX’s facility on Harvey Avenue, transforming the former Ferro Corp. building into a medical cannabis operation, court documents say.

The lawsuit claims FarmaceuticalRX still owes the contractor $1,485,552.18 per a written agreement signed June 3, 2021, with Palmer for the “Cultivation Project,” according to court papers.

According to the lawsuit, letters of intent were signed between the two companies March 14 and April 19, 2022, for additional improvements involving the processing portion of the property. Work began May 16 and ended June 6, 2022, court papers say, and $901,061.10 is still owed to Palmer.

“Although Palmer has stopped work at the subject property in light of the unpaid invoices, upon information and belief, the cannabis facility at the property has been in use and operational, based upon the work performed by Palmer and its subcontractors,” the lawsuit states.

A footnote included in the legal document states: “The only remaining work that Palmer has not performed on the Cultivation Project involves the construction of a corridor connecting the cultivation building to the processing building. Due to access issues – and through no fault of Palmer – performance of this scope was suspended until completion of the Processing Project, which has not yet occurred.”

Palmer claims in the lawsuit the company has performed its agreed-upon scope of work, providing all necessary labor, materials and equipment but has not been paid. 

The lawsuit refers to an “email chain” in July in which FarmaceuticalRX “set forth various timetables when payment(s) would be remitted.”

A copy of those emails obtained Monday through a public records request shows a dialogue beginning July 7, 2022, with a message from Palmer Construction President Bill Palmer to Rebecca Myers, CEO of FarmaceuticalRX, in which he notes an FRX employee “basically said you don’t have the money needed to pay us. We need to make a plan, maybe your [sic] working on one, but we should be communicating with each other. Silence makes me nervous. Call my cell phone.”

Myers responded that she thought representatives from their respective teams were “working this through,” saying she was traveling and suggesting they talk the next week.

Subsequent emails between the parties on July 10 indicated they planned to speak on July 12, followed by a July 13 email from FRX Controller Dana Phillips offering three scenarios of estimated payments.

“However, to this day, Palmer has not been paid,” the lawsuit states.

In August, Palmer filed in the Columbiana County Recorder’s Office a foreclosure on the mechanics’ lien it holds against FRX in relation to both projects, which was served on FRX in September.

Also named in the lawsuit are project subcontractors Protech Electrical Contracting LLC of East Liverpool; Wreck It Rich LLC of Louisville, Ohio; Climatech Inc. of Bridgeville, Pa.; Tolson Comfort Systems of Salem; North Coast Fire Protection Inc. of Warren; Sanford Plumbing LLC of East Liverpool; and Westhead Associates Inc. of Sewell, N.J.

A mechanics’ lien is a hold placed against property, generally filed by an unpaid contractor, subcontractor, laborer or material supplier and recorded with the county recorder’s office. If the costs remain unpaid, foreclosure action is allowed, which can force the sale of the property in lieu of compensation. 

Palmer is requesting the court marshal all the mechanics’ liens, foreclose Palmers Construction Co.’s lien and order sale of the property, using the proceeds to pay the amount owed for its work on the two projects, as well as legal costs.

A message for comment left for Myers was not returned.

FarmaceuticalRX received final certification from the Ohio Department of Commerce in February 2022 to start operations as a medical marijuana cultivation and processing facility.

Also in February, the company had closed a $34 million secured loan for funding the cultivation and processing facility as well as repaying existing debt, funding equipment purchases and as working capital.

In March of that year, it began operations in the newly renovated 10,000-square-foot building on Harvey Avenue, at which time Myers said the number of medical marijuana patients were doubling every year, noting the company had been having considerable success at its Farrell, Pa., location, which had previously opened.

The company opened its medical marijuana dispensary on Dresden Avenue in East Liverpool in Feb. 2019.

Pictured at top: Marijuana plants at the FarmaceuticalRX plant in East Liverpool.

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