Lift Bridge Brewing in legal battle about cannabis beverage production

Lift Bridge Brewing in Stillwater had big plans to start manufacturing THC-infused seltzers last year after Minnesota legalized the low-dose cannabis drinks.

But the brand Lift Bridge contracted with, Lyvly, allegedly never ordered any products, and a noncompete agreement is keeping the brewery from entering the lucrative cannabis beverage market on its own or with another brand.

Now the brewery is suing Lyvly and is asking a judge to tear up the contract.

"Lyvly is a failed business," reads the suit, filed earlier this month in Washington County. "It has failed to raise the capital necessary to operate its business" and won't be able to order products in the future.

"Lift Bridge and Lyvly entered into a contractual arrangement for Lift Bridge to produce certain products for Lyvly," Vince Louwagie,attorney for the brewery, said in a statement. "Through no fault of Lift Bridge, that arrangement has unfortunately not gone how either party hoped."

Attorneys for Lyvly and its CEO, Stillwater businessman Jon Wood, did not respond to requests for comment Thursday.

Lyvly's attorneys have asked the court to dismiss or pause the case while a similar case in Delaware is underway. Wood and business partner Andrew Heaberlin accused Lift Bridge and its owners of a breach of fiduciary duty.

The case in Delaware, filed in June, said Lift Bridge never delivered samples and alleged a plot to obtain a "secret profit."

"If Lift Bridge would have merely lived up to its commitment to produce the sample products, Lyvly would have been able to raise funds and make that kind of manufacturing order," the complaint stated.

The cases hinge on whether Lyvly is a joint venture. Lift Bridge owners Daniel Schwarz and Bradley Glynn said they are indirect shareholders.

"Lift Bridge and Lyvly have only a contractual relationship," their suit against Lyvly stated. "Lyvly, Wood and Heaberlin are attempting to blame Lift Bridge for their own failures."

Wood and Heaberlin argued otherwise and put out a press release last fall announcing a "joint venture" between the brewery and the brand.

Their suit in Delaware says Lift Bridge and its owners "refuse to meet their basic obligations to the joint venture ... until after Lyvly caves to Lift Bridge's demand to be released from its exclusivity obligation."

Lyvly's suit says Lift Bridge and its owners are "liable for the value of the business that they took from Lyvly due to their self-interested and neglectful conduct. Lyvly had a once-in-a-generation opportunity to establish a brand in a brand-new product market, but has now lost the opportunity."

The legalization of THC-infused beverages in Minnesota has given many breweries a needed boost as beer sales flatten nationwide after years of strong growth.

Lift Bridge's suit said several potential partners have approached the brewery about making cannabis-infused seltzers. Lift Bridge "has declined profitable opportunities" because of the noncompete agreement, according to the suit.

The provision "merely serves to eliminate competition in the market Lyvly intended to enter (but has not in fact entered)," the lawsuit reads.