Members of the NORML Legal Committee, led by attorney William Swor of Detroit, Michigan, have filed a friend-of-the-court (amicus) brief urging the US Court of Appeals for the Sixth Circuit to reconsider its decision that cannabis industry contracts are not enforceable as long as marijuana is federally prohibited. The case is Hello Farms Licensing MI, LLC v. GR Vending MI, LLC.
In September, a panel of the court overturned a $31.8 million jury award that Michigan marijuana cultivation company Hello Farms won against subsidiaries of Curaleaf Holdings, Inc. The panel ruled that federal courts cannot award breach-of-contract damages in situations that enforce an agreement specific to conduct prohibited by the US Controlled Substances Act, finding that “despite the legalization of marijuana in Michigan, federal courts cannot enforce agreements to commit federal crimes.”
NORML, the National Organization for the Reform of Marijuana Laws, is urging the appeals court to take another look at the dispute. “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.”
NORML argues that the ruling, if allowed to stand, effectively allows cannabis businesses to breach their contracts with impunity. The amicus brief 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,” NORML’s brief states. “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 settled, predictable rules on which market participants can rely, and meaningful remedies when contractual obligations are breached,” the brief continues. “Removing those remedies creates foreseeable risks for consumers. 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.”
NORML’s amicus brief concludes, “The Court should grant panel rehearing or rehearing en banc and reject the categorical rule that the CSA’s prohibition of marijuana, standing alone, forecloses the damages remedy sought here.”
The amicus brief is available in the NORML Legal Brief Bank.
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