The Increase And Decrease of Aspirational Marijuana Tycoons!
In July 2020, Michael Doherty stood on the roof of the famous John Bean building in Lansing. The building is a 460,000-square-foot brick fortress on South Cedar Street. Most of the country was shut down because of a global pandemic, which was also killing people all over the country. But the flamboyant Doherty was excited to talk about his plans to make a brand of marijuana called “Jack Daniels.”
“It was impossible to take on a project of this size,” he said, “but I knew it would be a great business move if I could do it.” “This building used to be a real powerhouse, and a big part of this is getting it back to where it used to be.”
To back up his boasts, he put Rehbel logos everywhere he could in the city. Lansing’s scenery changed to include the Rehbel billboard. But those signs are no longer there. Some were taken down and replaced with signs advertising God.
Doherty, who is 44 years old, no longer runs the business he had hoped would make a famous brand of marijuana. In Ingham County 30th Circuit Court, there are thousands of pages of documents that describe how his business went bankrupt and was taken over by creditors. Until now, no one knew about any of them.
In March 2022, two of Doherty’s creditors, the Jonathan and Mary Kay Borisch Family Foundation and JLB Monarch Holdings LLC, asked for an emergency order to put his two limited liability companies, MD Industries, and Rehbel Industries, into receivership. A foundation is a nonprofit group in Grand Rapids.
The state lists Jonathan Borisch as the agent for the limited liability company JLB Monarch Holdings. The emergency order was made by Judge Joyce Draganchuk the next day. In a receivership, a neutral third party called a “receiver,” is chosen to take control of a business, divide its assets and income, and sell its property to help businesses in the state that are having trouble making money.
The Michigan Court of Appeals has said that appointing a receiver is a “harsh remedy that should only be used in the worst of situations.” Court records show that Doherty signed promissory notes with the original creditors for a total of $10,527,968.18.
Access BIDCO, a business and industrial development company based in Lansing, and Nicholas Freund Building LLC, a construction management company based in Royal Oak, were also allowed to step in as creditors. This added another $2 million to the total debt.
All four lenders said that Doherty and his businesses didn’t meet the terms of their loan agreements because they didn’t pay their bills on time. Monarch and the foundation both said that the agreement had been broken again because the property taxes had not been paid on time.
MD Industries owes $110,260.62 in property taxes for the Bean Building at 1305 S. Cedar from 2021, according to records from Ingham County. The City of Lansing’s property database shows that the property still owes taxes for the winter of 2022 in the amount of $14,268.75.
Doherty’s money problems are just the most recent sign that the marijuana market in Michigan is changing. Green Peak Industries, which runs the Skymint brand and is based in Delta Township, was put into receivership two weeks ago because the company owed $127 million to its creditors.
In a statement to the Lansing State Journal, Green Peak executives said that the problems with money were caused by a drop in the price of marijuana. Doherty did not answer any questions. But in a 614-page handwritten document he filed this month in Circuit Court, he said that the creditors and receiver worked together to take over his businesses. He said it was an “aggressive takeover.”
The screed is full of printed copies of definitions from the internet, Wikipedia pages, quotes from movies and the Bible, and more. In the filing, he attacked the creditors’ character by saying they had too much property, didn’t understand how the marijuana business worked and had bad marriages.
In the court papers, he said that he had missed loan payments and put off paying taxes. In his defense, Doherty said that people had been allowed to pay back loans late before and that it was “no big deal.” He said that a business turnaround expert hired by the foundation told him to put off a property tax payment that was due in February until August.
He said that the reason the foundation and Monarch went to court to get the receivership was because of the late payment. “This was an attack on the company,” he wrote. “That was always the plan from the start.” When asked for comments, the lawyers involved in the case did not respond. No one has answered Doherty’s brief yet.
Foster Swift, a law firm with offices in Lansing, used to represent the person who grew pot. But six months into the case, in September 2022, Doherty’s law firm asked the court to stop representing him, saying that he had “substantially failed to fulfill his obligations to the lawyer about the lawyer’s services.”
The law firm said that if they kept helping Doherty, it would put too much of a financial strain on the firm. The filing said that “the relationship between the attorney and client had completely broken down.” The court let the withdrawal go through.
Phillip Hamilton, who is based in Kalamazoo, also said that the lawyer-client relationship had broken down when he asked Draganchuk for an order in February 2023 to stop being Doherty’s lawyer. This order was also granted, and Doherty was told in writing and in person by the court that he couldn’t argue for MD Industries or Rebel Industries if he tried to get their lawyers out of the case. He could only argue for himself. He now speaks for himself in the court case.
John Polderman of Simon PLLC in Troy, Michigan, was put in charge of the case by the court. From the beginning, he has had to overcome a lot of problems to get the business back on track financially. The first of these was that Doherty’s businesses were so intertwined that they were hard to tell apart.
Reh-bel was supposed to run the marijuana business, but MD Industries was in charge of paying for buildings and debts and buying equipment. Polderman found out that on paper, Rehbel was renting 100,000 square feet from MD Industries LLC to grow marijuana, but that no money was being sent. On May 31, 2022, Polderman said that Doherty had sold a packaging machine worth $190,000, which Polderman said was a lie.
Doherty admitted that he had sold the machine for $60,000 and not put the money into any of the business accounts. He said that the receivership only applied to MD Industries and not to Rehbel, which was the owner of the equipment. Court records show that by the beginning of June, Rehbel was added to the receivership and the money was sent to the accounts.
By agreeing with Polderman, Doherty didn’t get found guilty of civil contempt. Doherty also said that Polderman’s financial estimate of the business was much lower than the truth. Doherty said that the business and its assets would be worth $30 million in 2020, not the $8 million that Polderman said they were worth.
Polderman and the lawyers for the creditors said that Doherty’s valuation was skewed because he only gave the evaluator certain pieces of information. They said that information to back that up came from an employee who wasn’t named. Draganchuk agreed to the $8 million price and turned down Doherty’s offer. But the business owner who rode a motorcycle kept refusing to work with Polderman.
He also broke the rule that clients who have lawyers shouldn’t talk to the lawyers on the other side. The Lansing Building Safety Department made it impossible to move forward with the renewal of the three growing licenses that the state had given to Rehbel Industries.
Inspectors refused to give the city a certificate of occupancy because of the many violations, which stopped the city from letting the state renew the licenses. Polderman asked for and got an order on November 30, 2022, telling the city to give him a “punch list” of repairs that needed to be done before he could get a certificate of occupancy.
The order also said that the city couldn’t step in or stop the licenses from being renewed. The list was three pages long and had things like fixing electrical and plumbing problems on it. It also said that the building shouldn’t be used by anyone but the people who were working on it while the work was being done.
The Bean Building has 72 open building problems, according to the city’s records. Court orders show that Monarch and the foundation took control of business operations and the Bean Building, where the marijuana business is run. A real estate company in Grand Rapids is selling the Bean Building for $7.75 million.
Court records show that three houses that Doherty owned on Christiancy Street, which borders the 12-acre Bean Building property, were sold to people who have not been named. Doherty’s home at 5 Locust Lane in Lansing, Michigan, was sold to a person who has not been named. Records from Eaton County show that the property belongs to Simon PLLC, the company where Polderman works.
The house has six bedrooms and six bathrooms. It is in Eaton County and looks out over the Grand River. Saul Anuzis, who used to be the head of the Michigan Republican Party, used to own it. The receivership said Doherty couldn’t prove that his home wasn’t an asset of MD Industries because the costs of the property were listed on the business’s ledger.
Doherty said that he bought the house with his own money and showed checks as proof. Property records show that when Doherty says he bought the property, ownership was transferred from Anuzis to MD Industries, not to Doherty.
(MD Industries sold another property at 738 E. Kalamazoo St. in Lansing to Cloud Real Estate LLC, which is based in Okemos, in 2021, before the receivership started. The sale price was written down as $0.00. Doherty bought the property in 2015, and in 2018, he gave it to MD Industries. When Doherty bought it and painted it black, windows and all, people looked at him funny.
Doherty admits in one of the filings that his business took an unplanned $500,000 loss in 2020 when too much mercury was found in the marijuana plants and the building. He had to get rid of the mercury and destroy a crop. A spokesperson for the Michigan Occupational Safety and Health Administration said that a former worker filed a complaint about the mercury contamination in April 2021.
The complaint was not filed “on time” with the agency in charge of workplace safety, so no investigation was done. “Therefore, an inspection was not done,” a spokesperson said. A spokesperson for the U.S. Environmental Protection Agency said that the agency is looking over its records. On an EPA website about mercury contamination, it says that if more than a pound of mercury is spilled or contaminated (which is about two tablespoons), the EPA’s National Response Center must be told.
Doherty also filed dozens of pages of new documents on March 13 in Draganchuk’s court. Among his motions, he wants to charge Lansing City Attorney Jim Smiertka, his assistant Amanda O’Boyle, and the receiver, Polderman, with criminal contempt. He said that O’Boyle and Smiertka were in contempt of court because they wouldn’t tell him what Polderman had said to them about the Bean Building.
He wants Draganchuk to step down and be found guilty of civil contempt for allegedly not being fair when handling his case. Doherty himself has a criminal contempt hearing on April 4 because he has been “harassing and threatening people” in violation of court orders, as Polderman put it.
Polderman asked for the criminal finding after it was said that Doherty was sending his former employees threatening and annoying texts. He added to the claims after Doherty went to the title office that was handling the transfer of the Locust Lane property and asked to be told ahead of time about any title transfer meetings. He sent the title agent more emails, and one of them had a picture of Doherty’s son.
In the email, he said that the title agent might meet his son at some point. Receivers are supposed to help turn around a property or business while protecting a creditor’s interest. However, Doherty said that Polderman didn’t have any experience with growing marijuana. He said that his lack of experience had pretty much killed his business.
But Polderman’s company, Simon Law PLLC, is in charge of receiverships for other marijuana businesses in Michigan, such as the sale of an Ann Arbor dispensary. Doherty wrote that the business is “on life support only because of the court, with 17 workers instead of 50.” The job is done, and the system needs to be turned off properly. It is very hard to grow cannabis.”