Landlord-tenant disputes are usually of interest to no one but the landlord and the tenant, but there's a multi-million dollar fight unfolding now in California that offers a fascinating window into the wild west of the cannabis industry.

Trial kicked off last week in Monterey County Superior Court, where California cannabis giant Grupo Flor and its lawyers from Baker Botts are slugging it out against Moss Landing Commercial Park and its owner Nader Agha, represented by  San Jose, California-based Gates, Eisenhart & Dawson.

For Grupo Flor and Moss Landing, it was a relationship that started off high but turned to ash as the cannabis business began to boom. What's left in complaints and cross-complaints are allegations of fraud, deception and greed.

The dispute has its roots in 2016, when only medical marijuana was legal, Baker Botts partner Jonathan Shapiro told the jury in opening statements last week. 

Grupo was a start-up whose co-founder and CEO Gavin Kogan made his name as one of California's first cannabis business lawyers. 

The nascent venture needed a place to set up shop—somewhere big and out of the way. And like other growers at the time, Grupo needed "landlords that would let them grow their crop and landlords who would let them pay cash and landlords who didn't ask too many questions," Shapiro said, according to a transcript of the proceedings.

The Moss Landing site seemed like a good fit.  An industrial park on 200 acres, it was built during World War II to extract magnesium hydroxide from the ocean as part of the war effort.

 But by 2015, it was plagued with vacancies and many buildings were in disrepair. "Some had dirt floors, some had problems with the roofs, maybe some environmental issues," Shapiro told the jury. "The bank that held the debt had run out of patience and the park was set for auction."

But then two things changed: Moss Landing owner Agha found a new lender, the Lissoy family, which allegedly took an ownership stake in the property. And he found new tenants: Cannabis growers. 

"So this was a match made in heaven for the park. The park needed tenants, the growers needed a place to be and the park accepted cash," Shapiro said. 

In 2016, Grupo signed 20-year leases at the park. According to Shapiro, his client went on to pay more than $1.1 million in rent and utilities. It also poured money into renovations, major equipment and building its business at the locale. 

Agha had two conditions for the lease, Shapiro said. First, he wanted $192,000 in cash—three months' rent at $64,000 per month—delivered to his house.  (Jurors were shown a video of the giant bundle of $100 bills, but counsel for Agha disputes that he took the money, which now seems to have vanished.)

Agha also wanted a piece of the action, "to not just be a landlord but to have a 10% interest or ownership in the operation at the park," Shapiro said. "He asked. Grupo gave."

Grupo soon became the single largest tenant at the park, and for a short time, everything was fine. In November of 2016, California voters approved Proposition 64, legalizing the use of recreational marijuana. Agha and Grupo even allegedly threw a party together to celebrate.

Grupo was well-positioned for the boom. "It had 20-year leases, and lease rates were going up as a result of the new opportunities in the industry," Shapiro said. 

But according to Shapiro, the arrangement with Moss Landing fell apart with little warning in October of 2017, when Grupo was informed via email that its leases had been terminated. 

"The termination letter did not say why. No reason stated…Grupo could not figure out why it was terminated," Shapiro told the jury. "And eventually Grupo got the explanation, and it didn't come with a phone call or e-mail, it came in a lawsuit and for the first time Grupo heard that its 20-year leases were forged."

Wait, what? The leases were forged?

So what does counsel for Moss Landing and Agha have to say?

James Dawson in his opening statement offered a less cohesive narrative. He placed much of the blame on Grupo co-founder Mike Bitar, a real estate broker who was previously the Moss Landing property manager and Agha's "right hand man, confidant, best friend." 

Dawson said Bitar "attempted to get money or show his credibility using Mr. Agha's financials without his permission. Let me say this. Everything that I'm saying here, everything, without exception, Nader Agha did not know about any of this."

He added, "The evidence is going to show that Mr. Agha is a man of absolute impeccable integrity when it comes to finances, when it comes to anything else."

Dawson stressed that the leases were backdated to 2015—which opposing counsel admits, but says was done with mutual assent in an attempt to make the local permitting process easier. 

Dawson also said a handwriting expert will testify that the leases are forgeries—never mind that Grupo paid rent.

James Cook of Horan Llyod in Carmel represents Bittar, who is being sued for breach of fiduciary duty and fraud. 

In his opening, Cook argued  the eviction notice was precipitated when the Lissoy family—the lenders that bailed Agha out in 2015—found out that he'd taken a 10% stake in the cannabis tenants. 

"The Lissoys knew that Agha had a deal going with Grupo and they weren't cut in on it and they weren't happy. And they're the big dog," Cook said. 

Plus now that weed was legal, Grupo was paying bargain-basement rent. Once they were evicted, Moss Landing allegedly charged the new tenants twice as much—$130,000 per month, slated to ramp up to $200,000.

Trial is expected to run through mid-November.