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GRAND RAPIDS — The cannabis entrepreneur planning a marijuana business park in Grand Rapids is involved in a series of legal challenges related to his Missouri company.
The suits brought by investors and other cannabis businesses raise potential credibility concerns about Jack Mitchell, a principal investor in HWY35. But Mitchell denies the allegations, and the local entities funding Mitchell’s Minnesota endeavor — including the city of Grand Rapids and the state Department of Iron Range Resources and Rehabilitation — say safeguards are in place to prevent the misuse of loans and tax breaks.
Mitchell filed the first in a series of lawsuits regarding the pending sale of the company in October 2024. BesaMe Wellness, Mitchell’s Missouri company, sued Good Buds LLC, one of its investors, to prevent it from “taking further actions intended to sabotage” the sale of the company and its dispensary business, according to BesaMe’s October court petition.
Good Buds denied the allegations and demanded a jury trial in response.
A month-and-a-half later, a group of investors that includes Good Buds sued Mitchell, alleging he used BesaMe as his “personal piggy bank” and wrongly gave “millions of dollars in advances from BesaMe’s funds” to other businesses of his — including HWY35 — “for Mitchell’s personal gain and self-dealing.”
“Mitchell’s breach of his fiduciary duty, self-dealing, misappropriation of funds, failure to disclose material information, and breach of the Operating Agreement has caused and continues to cause BesaMe, and therefore BesaMe’s members, financial harm,” the lawsuit states.
“Mitchell’s conduct … was done willfully and with the intent to harm BesaMe and its members at the expense of enriching himself.”
Then, in December, another company filed suit against BesaMe related to the pending sale of its assets.
Mitchell denied the allegations against him in court filings and in an interview with KAXE. He said the legal battles can be traced to a group of investors who want to buy the Missouri dispensaries at a “big discount.”
He said BesaMe invested in a South Dakota project Mitchell was working on before Minnesota legalized cannabis, and the South Dakota partners have contributed some assets to HWY35 that they will “eventually get credit for.”
“But it’s as a limited, limited partner, and it could never affect HWY35 because they’re not involved in any way in HWY35 other than as that third party sort of creditor, investor of South Dakota,” Mitchell said.
He said he’s offered to cash the group of investors out of the investment. But they are making these allegations because they want to buy BesaMe at a discounted price, Mitchell said, repeating the allegations in his initial lawsuit.
“There’s no substantiation to back that up, other than these allegations they’ve made, which you can say anything in a court case,” he said.
Hearings are scheduled for the November and December cases in the coming weeks.
Missouri newspaper investigation alleges municipal meddling
But the legal fights are not the only area in which questions have been raised about Mitchell’s conduct.
In 2023, the Kansas City Star published an investigation alleging Mitchell had “effectively taken over” River Bend, Missouri, a small municipality near Kansas City, where he was planning to develop a marijuana-based entertainment district. Those plans have since been canceled.
In another story, published in December 2024, the Star reported all five members of the River Bend village board were arrested and faced felony charges for filing false election-related documents, allegedly not living in the village long enough to be eligible for office.
Two pleaded guilty to misdemeanor election offenses earlier this month after striking a deal with prosecutors.
The Star said Mitchell was connected to each of the board members either professionally or through family, and Missouri officials have also begun looking into the board and its connections to Mitchell.
“That relates to exactly the same thing. [That group of investors] who I have the huge fight with are down there,” Mitchell told KAXE. “ … It got dismissed for a small misdemeanor, so that’s how serious that all is.”
The other three board members still face felonies, with a jury trial for one set for Dec. 1. But Mitchell thinks those charges will also be reduced to misdemeanors.
“I’m sure they would love to find something against me, but nothing’s ever come up other than their allegations,” he said. “ … I have never, ever had the slightest problem with the law of any kind.”
Grand Rapids, IRRR say allegations won’t impact funding
HWY35 has not yet received loan funding from the IRRR because the agreement is contingent on the project being permitted and licensed.
The Minnesota Office of Cannabis Management announced in early February that it would begin accepting applications and plans to hold a lottery for capped license types — which HWY35 will be part of — in May or June.
The agency’s consideration of projects primarily revolves around its finances and economic potential. Executive Director of Development Ryan Malich told KAXE while every project is unique, IRRR considers projects’ equity, collateral, creditworthiness and ability to leverage other funding sources, plus the potential to benefit and diversify the economy.
Malich declined to comment on Mitchell’s lawsuits and other allegations. In a written statement, IRRR said, “To date the agency is not aware of any allegations that would impact funding for the project.”
Half of the $20 million loan from IRRR comes from a Department of Employment and Economic Development fund. DEED previously told MinnPost that IRRR’s vote does not bind it, and the agency would conduct its own due diligence for the project.
Megan Buffington
/
KAXE
Construction is underway at the former Ainsworth lumber mill site and future home of cannabis company HWY35. Photographed Feb. 21, 2025.
In response to an interview request from KAXE, DEED said IRRR is the source for HWY35 information.
Grand Rapids Director of Community Development Rob Mattei is aware of the lawsuits and allegations but did not express concern.
“He has a track record of working in this industry, and as long as he can perform here, which we expect he will, we’ll, I guess, look at that, rather than what might be going on in Missouri,” he told KAXE.
Mitchell’s alleged connection to the River Bend village board is “not very much of a concern at all,” Mattei said, because it is a very small community, and the proposed marijuana entertainment district was entirely different than HWY35.
Mattei also said there’s no risk to the city with pay-as-you-go tax increment financing, meaning the city will finance the project using the additional tax revenue created by the investment. The developer only gets the tax increment if it creates additional value on the property, he noted.
“The risk to the taxpayer is very limited in our approach,” he said. “ … All of it is upside, and the fact of the matter is, economic development requires a little more risk than a bank would take.”
The TIF agreement protects the city by adjusting the payment if certain benchmarks aren’t met — like in the case of the job requirement — or canceling the agreement entirely if HWY35 fails to pay its taxes or utilities, goes bankrupt or otherwise violates the contract.
In its lawsuit, Good Buds alleged in August 2024 BesaMe had owed the Missouri Department of Revenue over $175,000 for at least 60 days.
In the legal response, Mitchell denied the allegation on the grounds that he was “without knowledge or information sufficient” to determine its truth.
“Every month we pay our taxes to the Missouri Department of Revenue,” Mitchell told KAXE. “ … I actually never even saw that in [the lawsuit].”
He said it’s possible the allegation could be related to a bill for a few thousand dollars he had recently paid related to an old tax return. Regardless, it would be straightened out immediately.
“No disrespect, but I deal with millions of dollars a month on all these businesses,” he said. “So that will be taken care of but at least right now I do not know that to be an issue.”
“}]] Lawsuits brought by investors and an investigation by a Missouri newspaper raise potential credibility concerns about Jack Mitchell, a principal investor in HWY35. Read More
