Dynamis LLP Obtains Injunction on Behalf of Justice Cannabis Co. in Bet-the-Company Litigation in NJ Federal Court
On May 9, 2025, a federal judge in New Jersey granted a major victory to Justice Grown, a multi-state cannabis company, by issuing a preliminary injunction preventing lender Advanced Flower Capital Inc. (AFC Gamma) from seizing its assets or cash. The ruling comes amid ongoing litigation over whether Justice Grown defaulted on its loans.
Following a May 2 evidentiary hearing, U.S. District Judge Zahid N. Quraishi found that Justice Grown is likely to succeed on its claims of breach of contract and breach of the implied covenant of good faith and fair dealing. The court held that AFC Gamma acted in bad faith when it attempted to withdraw nearly $2 million from Justice Grown’s accounts, despite the company’s ongoing compliance with a 2024 forbearance agreement.
The judge found the testimony of Justice Grown and its executives credible, including evidence that AFC Gamma and its CEO, Dan Neville, interfered with Justice Grown’s rights under the loan agreement and forbearance agreement. In contrast, the court found Neville’s testimony only “somewhat credible” and assigned it “little weight,” citing his inability to answer basic financial questions and evasive responses under oath.
Justice Grown had argued that AFC Gamma’s actions—including a sudden demand for a $10 million payment and the subsequent withdrawal of $2 million—were timed to shore up its own financial position just days before it was due to pay a $5 million dividend to shareholders. The court agreed with this argument and found that the company would suffer irreparable harm if such actions were allowed to continue.
The lawsuit also details that AFC Gamma filed separate actions in New York, including claims against Justice Grown’s parent company JG HoldCo and its owners, amid the restraining order proceedings. The court found AFC’s failure to disclose its intent to file those suits during hearings in New Jersey significant enough to issue a show cause order.
Judge Quraishi ultimately concluded that the preliminary injunction is in the public interest and that the balance of equities tipped in favor of Justice Grown.
In a statement to Law360, Michael B. Homer of Dynamis LLP, counsel for Justice Grown, said:
“We appreciate Judge Quraishi’s thoughtful opinion enjoining Advanced Flower Capital from further misconduct. The Court rightly found my clients were not in default of their loan agreements, and that AFC was acting in bad faith. AFC tried to shake down the wrong company.”
The case is Hayden Gateway LLC et al. v. Advanced Flower Capital Inc. et al., case number 3:25-cv-02789, in the U.S. District Court for the District of New Jersey.
You can read the full Law360 article below.
