Glass House Withdraws Defamation Suit, Citing Catalyst Financial Viability Concerns and Harassment Threats to Customers

Glass House Brands Inc. ("Glass House" or the "Company") (CBOE CA: GLAS.A.U) (CBOE CA: GLAS.WT.U) (OTCQX: GLASF) (OTCQX: GHBWF), one of the fastest-growing, vertically integrated cannabis companies in the U.S., announced today that it will be voluntarily dismissing without prejudice its defamation lawsuit against Catalyst Cannabis Co., citing serious concerns about Catalyst’s financial viability, which could render a judgment worthless, and harassment threats by Catalyst to Glass House’s customers, and its customers’ customers.

Glass House sued Catalyst (South Cord Holdings and South Cord Management) and its two principals (Elliot Lewis and Damian Martin) for making defamatory statements accusing Glass House of selling into the unlicensed cannabis market, claims that Glass House has vehemently denied. Catalyst has not provided any credible evidence supporting its defamatory statements, despite promising to do so nine months ago. Instead, Catalyst has said that industry-wide, up to “93% of all legally cultivated cannabis ends up being diverted to the illicit market,” and that licensed operators should be held responsible for downstream diversions to the illicit market. Essentially Catalyst wants to put the entire industry on trial, something that Glass House does not want to be a part of. Glass House only conducts business with licensed operators and has no interest in subjecting its customers to similar harassment from Catalyst.

While Glass House is confident it would prevail in its defamation litigation, it said it has grave concerns about the financial viability of Catalyst and its ability to pay a judgment. As is widely reported, the cannabis retail market in California is under serious distress. Catalyst recently announced layoffs and the closure of one of its stores, citing the need for “some repairs.”

Moreover, Catalyst CEO Eliot Lewis boasted on social media about his company’s practice of systematically paying less excise taxes than what the state would want, paying $2 million less in one quarter alone (please see this link: https://www.linkedin.com/posts/elliotlewisceo_wftp-activity-7158590677 ...). If this number is consistent throughout the year, it would mean that Catalyst would be paying $8 million a year less in excise taxes than most, if not all, other cannabis retailers in the State with comparable sales.