Idrasil, a cannabis-based tablet aimed at the medical community, is at the center of a long-running lawsuit filed by the Securities and Exchange Commission against a California cannabis company.
The SEC alleges fraud and investor losses in the lawsuit, filed Sept. 28, 2021 against C3 International and its husband-and-wife management team, and accuses the defendants of raising about $2 million from more than 40 investors by misrepresenting the business and its cannabis pill — and selling stock in the company without filing a securities and registration statement.
C3 International CEO Steele Smith III said the lawsuit represents an attack by the federal government on a natural alternative to opioid pain medication that threatens the interests of the pharmaceutical industry.
"Eat s— d(er)ick. You reside in hell," Smith wrote in a June 15, 2023 email entered in the court record, followed by a middle finger emoji. The email came in reply to a message from SEC attorney Derek Bentsen to Smith and his wife Theresa Smith, C3's president, regarding scheduling in the case. The Smiths are representing themselves in the lawsuit.
Smith said he has no comment on the profane email: "It speaks for itself."
The case is scheduled for a jury trial Jan. 28, 2025, according to the latest court filings.
No settlement talks are taking place, said Smith, who told Benzinga he intends to file a countersuit seeking damages.
"I'm going to sue the SEC and I'm going to sue when the time is right."
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C3 Says SEC Does Big Pharma's Bidding: Idrasil tablets solve the problems associated with prescribing cannabis as medicine, Smith told Benzinga in a March interview.
Physicians "cannot write cannabis on their prescription pad. They can't write, ‘smoke half a joint, eat two gummies,'" he said. "That's not dosing. That's not titration."
Idrasil, which Smith said contains THC in balance with other phytocannabinoids, falls under the umbrella of trade secrets, the CEO said.
"When you publish a recipe, it can be stolen easily."
Doctors prescribed Idrasil to over 100 patients, and six insurance companies were covering the drug, Smith said. The pill is intended for pain, sleep, nausea and vomiting related to chemotherapy and psychiatric issues, he said.
"All these achievements, in total, scare the s— out of the pharma industry."
In a November 2023 press release, C3 said the SEC's lawsuit is unprecedented and shows big pharma's influence on the regulatory agency.
"The company believes that the SEC's actions are wholly intended to impede the successful launch of Idrasil and hinder C3's ability to raise essential capital for manufacturing and distribution," the release said.
C3 Hit With More Than $5M Judgment: U.S. District Judge Christina Snyder granted a default judgment against C3 in a Nov. 7, 2022 order and ordered disgorgement of $1,914,017; prejudgment interest of $146,723; and civil monetary penalties of $3,107,727. C3 failed to appear in the case, according to the court order.
On the same day, a default judgment against the Smiths was set aside.
The judgment against C3 is a proposed one, Smith told Benzinga. "The word ‘proposed' is not in PACER," Smith said, referring to the online filing system for federal courts. It's "a proposed judgment that was denied," he said.
When asked for comment on the C3 International case and specifically the November 2022 judgment, a SEC spokesperson told Benzinga: "We decline comment beyond our public filings on this matter."
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