Lawsuit Claims New Jersey Lawmaker Set Up Straw Cannabis Business Owners to Cheat Social Equity Rules

New Jersey State Sen. Raj Mukherji (D) is accused in a lawsuit of setting up straw owners for cannabis companies to take advantage of the state industry’s social equity rules, Politico reports. The lawsuit alleges that Mukherji, who has ownership in dispensaries in several states, recruited people from his political circle to serve as majority owners – on paper – of dispensaries but swapped them with other operators so both Mukherji and the other operators could take advantage of the social equity program.

The lawsuit was filed by Justin Shoham, a former chief of staff for Mukherji, who claims he was one of the straw owners of 60% of Story Dispensary in Springfield, New Jersey, that was actually operated by Jason Vedadi, a national cannabis executive and CEO of Story, and a management company bearing Mukherji’s initials. The lawsuit alleges that the executive and management company saddled the dispensary with $4 million in debt and closed within a year. Shoham claims in the lawsuit that he was offered $180,000 for his stake in the business, which he never received.

In a phone call recorded in 2022 outlined in the lawsuit, Mukherji is alleged to have explained the scheme, saying, “Wherever I have a minority or woman … at 60% they have their person at 40% and where they have their cannabis convict or social equity minority … at 60% I have my person at 40%.” 

In an interview with Politico, Mukherji denied the charges. 

“Whatever his quarrel, it’s not with me. And since that franchise lost millions, the record clearly shows nobody made a penny, except ironically Justin. Let’s start with the fact this simple business dispute only names me in the lawsuit to make it salacious and newsworthy. It conflates franchises in which I invested with franchises I’ve never been part of.” — Mukherji to Politico 

In a statement to Politico, Robert Donaher, Shoham’s attorney, said the “case follows a disturbing pattern throughout the cannabis industry, the exploitation by shadow monied interests of social justice and diversity owners.” 

“Instead,” Donaher said in a statement, “their interests and market advantages are being systematically appropriated.” 

In a statement to Politico, Lee Vartan, an attorney for Vedadi’s Story Companies, a parent company for Story Dispensary, called the lawsuit “a shakedown lawsuit of the worst kind” and said that if it is not dismissed quickly, the company “will file counterclaims for the millions of dollars it lost in Springfield, in part because Mr. Shoham repeatedly breached his fiduciary duties.” 

Shoham’s lawsuit, filed in Union County Superior Court, alleges fraud, concealment, breach of contract, unjust enrichment and civil conspiracy, among other counts. He’s seeking $191,500 in consulting fees related to a planned dispensary in Union Township that never opened, $180,000 for his Story Dispensary share, and punitive damages. 

“The complaint filed by Justin Shoham takes a business that failed despite every effort by Story to save it and recasts it as a conspiracy. Story categorically rejects the claims against it and will defend itself vigorously,” Vartan said in the statement. “The structure of the Springfield store, including plaintiff’s role, was fully disclosed to and approved by state regulators. An affiliate of Story committed millions of dollars to give the business every chance to succeed. Despite that support, the store never turned a profit.”