After an LA Times investigation connected the co-founder of huge dispensary chain Stiiizy to nine illegal marijuana shops in Southern California, a new lawsuit accuses Stiiizy of operating twice as many illegal, unlicensed dispensaries.

San Francisco has four locations of the chain-store cannabis dispensary Stiiizy (Union Square, SoMa, Mission-Bernal, and Parkmerced), but you might not realize they’re the biggest dispensary chain in California with 31 locations. Moreover, Stiiizy sells more cannabis products than anyone else in the state, with an reported 8.9% market share, the largest of any cannabis company statewide. And Stiiizy has a ton more dispensaries in Southern California (17, with another opening next week) than here in the Bay Area, while parenthetically, the Los Angeles metro area happens to be crawling with illegal, unlicensed dispensaries the likes of which we do not see here.

And a Los Angeles Times report last week shocked the legal weed industry by connecting Stiiizy to the illegal L.A. pot shops. The Times reported that Stiiizy co-founder Tony Huang has owned nine buildings that operated illegal pot shops, and moreover, had faced lawsuits from the City of Los Angeles and City of Compton alleging that Huang knew full well he owned sites running underground weed shops.

“According to a review of property, court and tax records by the Times, Huang also owned nine properties through a network of holding companies that municipal, county or state authorities have identified as sites of illegal dispensaries,” the Times reported. “The documents revealed ties between Huang’s properties and a larger web of unlawful cannabis storefronts across the Southland connected through real estate deals, common lenders or shared tenants.”

On one hand, Stiiizy claims Huang is no longer involved with the company. On the other hand, Huang is founder of and advisor to Stiiizy’s parent company Shryne Group, so you can judge for yourself whether Huang is still “involved with” Stiiizy.

Huang declined to comment to the Times, but his spokesperson claims Huang sold the buildings once he learned tenants were operating illegally, and that Huang “will work cooperatively with the city of Compton to establish that allegation (in their lawsuit) is false.”

Stiiizy president Tak Sato gave a lengthy denial interview to trade publication Marijuana Business Daily. “I don’t want to minimize the allegations, but they are from many, many years ago,” Sato told that publication. “They have absolutely zero connection to Stiiizy and have zero effect on Stiiizy’s fully legal and confined activities.”

Yet still, SFGate reported the day after the Times report was published that Stiiizy sent the Times a cease-and-desist order to stop publication of the article. And that reports note the curious connection the Huang and Stiiizy have the same attorney.

The California Department of Cannabis Control has not stripped Stiiizy or Huang of any of their licenses, but acknowledged the agency was “currently investigating this situation to determine the appropriate next steps.”

Amidst all this, a separate SFGate story noted that a former Shryne Group executive has sued Stiiizy claiming they knowingly operated 18 illegal dispensaries statewide. That suit is from former Shryne Group CEO Jon Avidor, who claims Stiiizy was  “running a sprawling enterprise of eighteen (18) or more unlicensed, illegal cannabis dispensaries.” Avidor says he was fired for speaking up about the illegal activity.

Avidor alleges in his lawsuit that Stiiizy would “purchase properties through shell companies and strawmen to cover their tracks and enlist affiliates (sometimes Company employees) to help run these black-market stores.”

It is not unusual in the legal weed industry these days for a jettisoned executive to sue their former company, alleging their were fired for whistleblowing on illegal activity. What is unusual is for multiple cities to have their own lawsuits against that company that mirror the ex-employee’s exact same allegations.

So there’s definitely smoke with these accusations linking the legal marijuana industry with the illegal marijuana industry. But we’ll see over time if there’s actually any fire.

Note: This post has been updated to note that Stiiizy recently opened a fourth SF location at Parkmerced.

Related: High Times on the Hook For $5 Million In Unpaid Rent at Failed Union Square Dispensary Space [SFist]

Image: Joe Kukura, SFist