Politics
NORML Says Federal Prohibition Shouldn’t Make Marijuana Industry Contracts Unenforceable
A leading marijuana consumer advocacy organization is urging a federal appeals court to reconsider its ruling that cannabis industry contracts are not enforceable as long as federal prohibition remains in effect.
Last month, a panel of the U.S. Court of Appeals for the Sixth Circuit overturned a $31.8 million jury award that Michigan marijuana cultivation company Hello Farms won against subsidiaries of Curaleaf Holdings, Inc., finding that “despite the legalization of marijuana in Michigan, federal courts cannot enforce agreements to commit federal crimes.”
Now, the National Organization for the Reform of Marijuana Laws (NORML) is urging the appeals court to take another look at the dispute and is moving to file an amicus brief in the case.
“NORML brings a distinct consumer perspective to this commercial dispute,” the group said in a motion seeking permission to file the friend of the court brief. “The panel’s categorical reliance on federal illegality to foreclose civil remedies threatens commercial accountability in lawful state-regulated cannabis markets and, ultimately, the medical patients and adult-use consumers those markets serve.”
The amicus brief itself, which NORML also sent to the court, argues that the court neglected to consider broader public interests in the outcome of the case.
“The interest of NORML here is not in protecting a particular company’s profits,” it says. “It is in preserving the civil accountability on which consumers in state-regulated cannabis markets depend. Those consumers include medical patients and adults who lawfully purchase cannabis under state law without medical authorization.”
“A regulated cannabis market requires more than issuing licenses. It requires settled, predictable rules on which market participants can rely, and meaningful remedies when contractual obligations are breached. Consumers depend on growers, distributors, and retailers to honor commitments that support reliable supply and product testing for safety. The panel’s categorical rule removes a central means of holding businesses accountable, without asking whether that result advances the federal policy invoked to require it.”
The underlying case concerns Hello Farms’s claim that the Curaleaf subsidiaries breached a contract when walking away from a deal to purchase cannabis from the company after market prices fell. A jury initially sided with Hello Farms, but then the appeals court threw out the award due to ongoing federal prohibition.
The Sixth Circuit holding “threatens the accountability on which cannabis consumers depend,” NORML’s brief argues, citing the contract in question’s provisions concerning testing cannabis for potency and contaminants.
“Consumers depend on enforceable commercial obligations supporting product testing and reliable distribution,” it says.
The cannabis consumer group’s brief characterizes its ask of the court as “limited.”
“NORML does not ask this Court to compel unlawful performance or immunize anyone from federal enforcement,” it says. “It asks that the Court reject categorical nonenforcement in favor of the statutory and public-interest inquiry its precedents require.”
Joseph Bondy, the chair of NORML’s board of directors, told Marijuana Moment that the group is “concerned that this ruling effectively allows cannabis businesses to breach their contracts with impunity, undermining the accountability, consumer access and safety protections on which state-regulated markets depend.”
Curaleaf Chairman and CEO Boris Jordan said last month that he was “pleased” with the Sixth Circuit’s ruling, which he characterized as “consistent with the position we’ve maintained throughout.
“We remain committed to supporting cannabis reform and continued progress toward legalization,” he said.
Read NORML’s motion and brief below:
Photo courtesy of Max Pixel.
