Gemini Extraction Inc. has counter-sued a supplier of CBD extraction machinery, marking a salvo in a dispute over installation and equipment of a company claiming to be one of the largest extractors in the country.
The newest lawsuit filed by Gemini in Weld County District Court late last week claims that it hired Smith Systems LLC to build several CBD extraction machines for its site in Erie in July 2019 but said it was delivered not a new machine but a used and severely damaged machine. The machine also did not fit to multiple specifications that Gemini relied on in its retrofitting, the suit claims.
Gemini, which previously went under the trade name Zelios Colorado, claims to be either the largest or second-largest ethanol-based CBD extractor in the state. The company currently operates out of a site near the Tri-County Airport, managing 16 machines capable of generating up to 200 kilograms of CBD isolate per day.
In an interview with BizWest, Smith Systems owner Anthony Smith said Gemini took delivery of his company’s products at the time and accepted them as new.
In his own lawsuits, Smith claims that Gemini failed to hire a consultant with experience in hazardous materials, which led to them making calls such as trying to install the extractor on an outside concrete pad against city code. He claims Gemini has refused to pay him for his equipment delivery or attempts to install it in a manner that conforms to Erie’s rules.
Smith also told BizWest that Gemini pulled a light-industrial construction permit rather than the heavy-industrial permit it needed in order to hold enough solvent on-site to meet the maximum amount of extraction that the machines could make.
In his view, Smith believes he was misled by Gemini’s leadership, which he said gave him bad information about the status of acquiring building permits.
In particular, Smith said his company is being scapegoated because Gemini CEO Zach Nassar is a partner with his family’s development company, and making that kind of construction mistake would make investors question Gemini’s leadership.
“They did six months of diligence on my equipment and talked with other people who bought my equipment before they pulled the trigger,” he said. “And then it resulted in them being extremely embarrassed and trying to blame it on us.”
Gemini has broadly denied the allegations in Smith’s lawsuit and moved to dismiss that case shortly before filing its own counter-suit.
The Gemini suit claims that Smith required Gemini to foot the costs up-front with the promise of reimbursement later and alleged that installation couldn’t have been completed because several parts were not approved for use in the U.S., or didn’t comply with safety standards.
In an emailed statement, Gemini President and General Counsel Devin Visciano said the company believes Smith’s claims will be determined to be without merit by the court.
“While Gemini and its principals regret that the matter has escalated to formal legal action, such action was deemed necessary after more than a year-and-a-half of delays caused by Smith and his entities,” he said.
Visciano said Gemini is operating with all necessary approvals despite the setback it claims Smith put it through.
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