A Michigan cannabis cultivator won a $31.8 million jury verdict against companies connected to Curaleaf, only to have the entire award overturned after a federal appeals court ruled that the contract at the center of the dispute could not be enforced because it involved federally illegal cannabis activity.
The September 10 decision from the U.S. Court of Appeals for the Sixth Circuit in Hello Farms Licensing MI, LLC v. GR Vending MI, LLC could have significant implications for cannabis businesses operating in Michigan, Ohio, Kentucky and Tennessee, where published Sixth Circuit decisions establish binding precedent.
The dispute began in 2020 when GR Vending MI and CURA MI, both Curaleaf subsidiaries, entered into an agreement to purchase cannabis produced by Hello Farms. GR Vending paid a $2.2 million deposit and accepted an initial shipment before stopping additional deliveries as wholesale cannabis prices declined.
Hello Farms eventually sold the remaining cannabis to other buyers at lower prices and sued for breach of contract. A federal jury awarded the cultivator $31.8 million in lost profits.
The appeals court ultimately rejected the award, finding that enforcing the agreement would require a federal court to enforce a contract involving conduct prohibited by the federal Controlled Substances Act.
Hello Farms argued that the transaction involved Michigan’s regulated medical cannabis program and should therefore receive protection under the Rohrabacher Farr Amendment. The court disagreed, pointing to language in the contract involving recreational cannabis and noting that the federal spending restriction does not actually make marijuana federally legal.
The court also rejected the argument that the federal government’s 2026 marijuana rescheduling changes could save the agreement. According to the ruling, the contract’s legality had to be considered when it was created, and the federal changes were not retroactive.
Get a Flower Mill today
(Use code “MidwestDazed” to save)
The Curaleaf connection makes the decision particularly interesting.
Curaleaf has publicly advocated for federal cannabis reform and has lobbied Congress on legislation involving federal cannabis legalization and changes to the Controlled Substances Act. Yet in this case, its subsidiaries successfully relied on the continuing federal prohibition of cannabis to overturn a multimillion dollar judgment.
That doesn’t make the legal argument invalid. The Sixth Circuit accepted it. But it highlights the strange position the cannabis industry continues to occupy: companies can be fully licensed and compliant under state law while still operating under federal prohibition when they enter commercial agreements.
For cannabis businesses, the Hello Farms decision is another reminder that a contract being legal under state cannabis law does not necessarily guarantee that a federal court will enforce it.
Stay in the loop with all things Illinois Cannabis by joining the Couch Lock’d Newsletter here!
Become a Couch Lock’d Member.
Find our latest reviews here.
Need a new bong? Use code “MidwestDazed” to save 15% on Mota Glass
Hosting an event & need a consumption bar? Hit us up here.
Save money with our affiliate links here.
Get your Illinois Medical Card for $75 now with our link here or code “CouchLockd”!