Curaleaf woes continue….

Yoakum v. Curaleaf, Inc., United States District Court, District of Oregon, Portland Division (Pending)

I have commented on Curaleaf’s recent woes in prior issues. It’s not over yet. A tenth lawsuit involving a wrongful death count is being filed. 

I was lucky enough to speak with Michael Fuller, the Plaintiff’s attorney in this matter. He graciously supplied me with a copy of the complaint to be filed.

The complaint essentially alleges that Mr. Earl Jacobe {“the deceased”) consumed Select CBD Drops that Curaleaf created and marketed. Curaleaf labeled the drops as containing cannabidiol (“CBD”) which does not create intoxication effects. The deceased’s Select CBD Drops, however actually contained tetrahydrocannabinol (“THC”). The complaint goes on to allege that, “Defendant’s wrongful acts and omissions as alleged in this complaint were a substantial factor in causing the death of Mr. Jacobe on October 19, 2021”. The complaint seeks, “punitive damages in an amount to be determined by the jury not to exceed 1% of defendant’s net worth.”

I asked Mr. Fuller what he thought about all of this, and he stated, “Cura’s gross negligence is even more disappointing to those of us who have worked to support the cannabis legalization movement. By continuing to violate health and safety regulations, Cura continues to
set the legalization movement back.”

Stay tuned…

Is Apex Getting Robbed a third time? 

Apex Solutions, Inc. v. Falls Lake National Insurance Company et al, 21-cv-05496-HSG (N.D. cal. Nov 3, 2021)

Apex Solutions, Inc. (“Plaintiff”) filed this action in Alameda County Superior Court, California on May 17, 2021, regarding a commercial insurance policy issued by Defendant Falls Lake Insurance Management Company, Inc.(“Defendant”).  Plaintiff owns a business in Oakland, California, that manufactures, sells, and distributes cannabis and cannabis-related items.

Plaintiff claims that its business was broken into twice on June 1, 2020. First, at 1:47 a.m., someone broke into its warehouse and stole cannabis items worth about $600,000 from “Vault #1” Second, at 2:54 a.m., multiple persons broke into the company’s warehouse and took cannabis items worth about $600,000, this time from “Vault #2.  “Plaintiff further claims that the warehouse was damaged because of the incident. Plaintiff claims that Defendant accepted coverage under the insurance policy for these instances, but that over $1.5 million is still owed. Plaintiff claims that defendant erred in treating the burglary of Vault #1 and Vault #2 as a single occurrence under the insurance policy, and in applying a coinsurance provision to lower the amount payable under the policy.

The case has been remanded to state court and is still pending. 

We will see.

More contract disputes…

Moose Agric. V. Layn U.S. Inc., 1:20-cv-02508-RBJ (D. Colo. Dec. 10, 2021)

Moose Agricultural, LLC and Colorado Hemp Solutions, LLC (“Plaintiffs”) filed suit against Layn U.S. Inc.  (“Defendant Layn”) and Hemprise, LLC (“Defendant Hemprise”), (“Collectively referred to as Defendants.)

Plaintiffs entered into a contract to supply hemp biomass products to Defendant Layn. The contract, called the “High CBD Hemp Biomass Product Supply Agreement” was entered into on May 22, 2019. On November 15, 2019, Defendant Layn entered into a contract with Defendant Hemprise called “Assignment of High Cannabidiol Dried Hemp Biomass Product Supply Agreement”. In this contract, Defendant Layn assigned or transferred its rights, title, and interests under the original contract to Defendant Hemprise. Defendant Hemprise agreed to assume all of Defendant Layn’s obligations under the original contract. 

The parties had problems with the contract’s performance beginning shortly before the assignment and extending for months. Plaintiffs contend that Defendants breached the original contract by attempting to get out of the contract using impermissible means. Defendants have counterclaimed for breach of contract, arguing that plaintiffs failed to provide hemp biomass of the quality specified in the original contract.

Defendant Layn requested summary judgment on its breach of contract claim. They argue that it is no longer liable for any alleged breach of contract because it assigned its rights and duties under the original contract to Defendant Hemprise. They further argue that because Plaintiffs consented to the assignment, Defendant Layn is no longer even secondarily liable for any breach of the original contract. Plaintiffs argue that Defendant Layn remains secondarily liable for the breach of contract even after the assignment agreement.

Summary Judgment has been denied and the parties are still fighting it out.

Kind Therapeutics U.S., LLC v. Mari Holdings MD, LLC, 1194-2020, at *1 (Md. Ct. Spec. App. Dec. 7, 2021)

MariMed, Inc (“MM Inc.”), filed an action in the Circuit Court for Washington County against Kind Therapeutics USA, LLC (“Kind”) This lawsuit stems from a breach of contract issue between the parties. The trial court granted a preliminary injunction, forcing the parties to abide by their contractual commitments. Kind appealed the decision. 

The allegations are that The MariMed Parties had mismanaged Kind’s medical cannabis business, and the many agreements underlying the parties’ commercial relationships were illegitimate and unenforceable. Kind sought a preliminary and permanent injunction order to prevent the MariMed Parties from interfering with Kind’s company while the case was pending. Kind was served with a counterclaim and a third-party action by the MariMed Parties. The MariMed Parties requested a preliminary and permanent injunction against Kind interfering with their management, leasing, and product licensing rights in Kind’s company, facilities, and product licenses, respectively.

1. Whether the trial court correctly determined that the MariMed Parties were likely to succeed on the merits of the claims against Kind.
2. Whether the trial court correctly determined that the MariMed Parties were likely to suffer substantial, irreparable harm without a preliminary injunction.
3. Whether the trial court correctly determined that the balance of convenience favored the MariMed Parties.
4. Whether the trial court correctly determined that the public interest is best served by granting a preliminary injunction in favor of the MariMed Parties.

The appellate court determined that the trial court did not misuse its authority in awarding the MariMed Parties a preliminary injunction; the trial court’s determination that the MariMed Parties had a good chance of succeeding on the merits of their claims was not an abuse of discretion; The trial court rightly determined that denying the preliminary injunction would cause irreparable harm to the MariMed Parties; and that the balance of convenience and public interest favored granting the preliminary injunction. The decision of the lower court was affirmed.

South of the border…

The Mexican Supreme Court has granted an injunction to Xebra’s wholly owned Mexican subsidiary, Xebra Mexico, giving it an advantage in the Mexican CBD and CBG markets.

Xebra Mexico filed an appeal after the Federal Commission for the Protection Against Sanitary Risks (“COFEPRIS”) refused to grant authorization to Xebra Mexico for the sowing, farming, and harvesting of hemp for manufacturing products with concentrations equal to or less than 1% of tetrahydrocannabinol (“THC”).

On December 1st, the Supreme Court of Justice’s First Chamber ruled in favor of Xebra Mexico, declaring the provisions of the Health Law and the Criminal Code that prohibit the sowing, farming, and harvesting of hemp, for purposes other than medical and scientific research to be unconstitutional.

The Supreme Court determined that the prohibitions are an ineffective remedy that has a disproportionate impact on the poor.  Regardless, Xebra clearly came out ahead of the game.  As a result of the injunction, Xebra Mexico is the only company in Mexico that will be authorized to legally import cannabis seeds, cultivate cannabis, process cannabis, extract cannabinoids, and manufacture cannabis products.  

The Dormant Commerce Clause returns….

Original Invs. v. Oklahoma, No. CIV-20-820-F, at *1 (W.D. Okla. June 4, 2021)

I truly believe this issue will be before the United States Supreme Court.

In this case, Original Investments, LLC, d/b/a Dank’s Wonder Emporium (“Plaintiff”), filed suit seeking declaratory and injunctive relief from the enforcement of section 427.14(E)(7) of the Oklahoma Medical Marijuana and Patient Protection Act. Plaintiff claims the law violates  the dormant Commerce Clause of the United States Constitution. Plaintiff is challenging section 427.14(E)(7) of the Oklahoma Revised Statutes because it forbids non-residents from getting Oklahoma medical marijuana business licenses or owning more than 25% of any Oklahoma corporation that holds an Oklahoma medicinal marijuana business license.

However, in this case the Court applied the illegality rule.  The court stated, “There is no dispute that the relief plaintiff seeks against the defendant state officials is equitable. It is well-settled, however, that ‘a court won’t use its equitable power to facilitate illegal conduct.”  The court essential ruled that the court will not use its equitable powers to allow activity that is illegal at the federal level.

It will be interesting to watch.

Legislative Update….

Massachusetts is leading the way: health insurance coverage for medical marijuana products and related clinical visits would be legalized under a bill introduced by state Rep. David LeBoeuf, D-Worcester, and state Sens. Julian Cyr, D-Truro, and Jason Lewis, D-Winchester.

Dr. Ryan Zacklin of the MassGeneral Brigham network stated, “Cannabis is medicine, it’s indisputable. All of my medical expenses are covered by insurance There’s no reason this shouldn’t be the case.”

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LAWYER JOKE OF THE DAY

Just before Christmas, an honest politician, a generous lawyer and Santa Claus all got into the elevator at the Ritz Hotel in New York City. As the elevator traveled from the 5th floor down to the ground level, one-by-one they noticed a $50 bill lying on the elevator’s floor. Which one picked up the $50 bill, and handed it in at reception? Santa of course, the other two don’t actually exist!

Happy Holidays everyone!

Jason Morgan Roberts is an Attorney and Legal Commentator in the Chicagoland Area.  He can be reached at [email protected].  His commentary is not to be considered legal advice.