Out walking his dog some nine years ago, entrepreneur Shane Whittle met Rohan Marley, son of the famed reggae singer Bob Marley. They connected, played some soccer together and, in 2007, partnered to launch Marley Coffee, a Beverly Hills company that licensed Marley-branded coffee.

Today, riding a boom in the coffee business, the idea has taken off. But as Marley Coffee’s sales nearly tripled in the last quarter, the co-founders have found themselves in a fight for control of the business.

Whittle, who said he’s been sidelined at Marley Coffee and pushed out from Jammin Java Corp., a related public company that is the exclusive distributor of Marley Coffee, is left battling for a share of the escalating sales.

“I have been cut out,” Whittle said in an email statement.

Rohan Marley, founder and chairman of Jammin Java, said the coffee venture, which had foundered before the recent upswing, needed to move on without Whittle.

The fight comes as the business prepares to leverage its recent growth into further expansion. Jammin Java, which contracts with third-party roasters for coffee it then sells under the Marley Coffee brand, sells its products in about 5,000 locations across the country, up from 1,000 at the beginning of the year. Though no longer involved in the company’s operations, Whittle retains a 3.6 percent stake in Jammin Java, worth around $1.1 million at its recent closing price of 45 cents a share.

Marley, speaking to the Business Journal from New York, said the future of the Marley Coffee enterprise was bright. Jammin Java’s shares have more than quadrupled in value since the start of the year, and last month the public company relocated its headquarters from Beverly Hills to Denver, where its new chief executive resides and where it just acquired the assets of a beverage services company.

“The growth of the company is really, really tremendous,” Marley said. Of Whittle’s separation, he added, “Sometimes someone doesn’t like the way you do things, and you have to part ways to grow the business.”

The sudden momentum and the partner dispute are the latest twists in a dramatic few years for the venture. After skyrocketing to an all-time high of $6.35 in May 2011, briefly giving Jammin Java a market cap topping $400 million despite almost no sales, shares crashed to less than a dollar. The suspicious rise and fall led to allegations of a pump and dump scheme, in which promoters hype up a company with misleading information and then sell shares at an inflated price, and prompted an investigation by the Securities and Exchange Commission. The SEC would not comment on the investigation, and no enforcement action has been taken.

Shares bottomed out at 8 cents at the beginning of this year, but have steadily rebounded on news of growth, closing at 45 cents on Sept. 11. The stock is traded on the over-the-counter markets.

Growth opportunity

Under its new management, Jammin Java started the year swinging deals. It began selling through Kroger and Safeway, expanded its presence at Whole Foods and reported $817,000 in sales in the quarter ending in April, up from $310,000 in the same period a year before.

The gains at Jammin Java come as the coffee industry has been booming, helped by a drop in coffee bean prices and high consumer demand for single-serve cups, according to Tony Brenner, an analyst at Roth Capital Partners in Newport Beach. Waterbury, Vt.’s Green Mountain Coffee Roasters Inc., maker of the market-leading single-serve Keurig machine, has seen its shares rise more than 160 percent in the last year.

“All the growth in home coffee is in single-serve,” Brenner said.

But Green Mountain’s patents also expired late last year, allowing other companies to make single-serving coffee pods compatible with its machines. Jammin Java has taken advantage, and now roughly 70 percent of its sales come from single-serve products, said Brent Toevs, its current chief executive.

Green Mountain has announced it will begin rolling out new Keurig machines that identify only licensed single-serve cups, but Toevs said he was confident of his company’s prospects, saying there are millions of machines compatible with its products.

“In our view we are well-positioned for huge growth in this segment for the foreseeable future,” Toevs said.

Whittle, meanwhile, has been left on the outside.

He and Marley have primary residences in Vancouver and New York, respectively, but came to know each other because they kept vacation homes in the same building in Los Angeles. Whittle said they became “great friends” and played soccer together with a group of friends, including Rohan’s brother, singer Ziggy Marley.

The pair talked business – Rohan had launched an apparel company, Tuff Gong Clothing, while Whittle had run several startup companies in Canada including online document editing service Radium Ventures Inc. and health diagnostic testing company Global Industries Corp. In 2007, the two decided to start a coffee company that would feature Rohan Marley’s name and likeness. Whittle said the business was his idea.

“Next thing I knew, I was off to Jamaica, met all the farmers and fell in love with what we were about to embark on for years to come,” Whittle said in an e-mail.

Marley said his interest in a coffee venture came years earlier, dating to his 1999 purchase of Jamaican farmland.

Launch and fallout

Marley founded Marley Coffee Inc., a marketing and distribution business, in the Fairfax District in 2008. The next year, with Whittle as its chief executive, treasurer, secretary and director, it went public through a reverse merger, changed its name to Jammin Java and moved to Beverly Hills.

Marley Coffee LLC, the branding and licensing company, launched in 2009 and Whittle invested $600,000 for a 30 percent stake in that business, according to documents filed in Los Angeles Superior Court. Rohan Marley had a 50 percent stake, while Hope Road Merchandising, a company owned by Bob Marley’s family that manages his estate, owned the balance.

Jammin Java licensed the Marley Coffee name and designs from Marley Coffee LLC, agreeing to issue the licensor 1 million shares a year, and began selling packages of coffee beans in Larchmont Village and other parts of Los Angeles. Shortly after the licensing deal was struck in spring 2010, Whittle resigned his positions at Jammin Java for reasons that are unclear.

What is clear is that business was slow. Jammin Java’s sales in 2010, its first full year of operation, reached just $1,037. But in early 2011, its stock took off, boosted by anonymous Internet newsletters and websites hyping the company. It quickly cratered, leading to the “pump and dump” allegations. Jammin Java denied any connection to the outside promoters.

Whittle returned to the company as a sales and marketing consultant after the wild stock swing, only to leave again after the licensing business, Marley Coffee LLC, reshuffled its ownership structure. Hope Road’s holdings were increased to 33 percent, Rohan Marley’s stake shrunk to 33 percent and Whittle’s share trimmed to 29 percent. The balance was allocated to individual shareholders, according to the court filings.

Regulatory filings show that shortly after Whittle left in 2012, Jammin Java ended its Marley Coffee LLC licensing agreement and struck a 15-year deal with Fifty Six Hope Road Music Ltd., another company owned by the Marley estate, agreeing to a royalty fee of 3 percent of net sales from licensed products.

The change, Whittle alleges, essentially left Marley Coffee LLC – the business in which he has a significant stake – with no assets or cash flow. Last month he sued Rohan Marley, Jammin Java and the Marley estate in Los Angeles Superior Court, saying the license transfer was made without his consent and seeking a share of the profits generated since the change was made.

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