Michigan cannabis grower Hello Farms is set to receive $32 million after a federal court jury found earlier this week that Curaleaf, the country’s largest weed company, breached its purchase agreement.
The ruling comes after nearly four years of battling in court between Curaleaf and the Au Gres-based grower.
Curaleaf agreed to buy thousands of pounds of Hello Farms’ outdoor grown cannabis if its product achieved more than 12% tetrahydrocannabinol — or THC, the psychoactive ingredient in cannabis — for $1,000 a pound in 2020 and $850 a pound in 2021.
But after acquiring just 2,000 pounds of the contracted 16,000 pounds in 2020, Curaleaf demanded to renegotiate as prices in the state’s legal industry were cratering.
Between January and December 2020, retail medical marijuana prices fell more than 15% to $254.91 an ounce, or $4,078.56 per pound, and adult-use recreational marijuana prices plummeted more than 31% to $350.88 an ounce, or $5,614.08, a pound.
The state’s recreational weed industry began sales in December 2019 and growers and retailers were quickly coming online throughout the year.
By the end of 2021, medical prices had fallen to $175.67 an ounce and adult-use to just $184.90 an ounce, a 64% decrease from when since early 2020.
Curaleaf demanded a 60% price cut for the 2020 harvest and sought to negotiate a new price for the 2021 harvest, according to the lawsuit filed in February 2021 in Michigan Circuit Court in Tawas City by Hello Farms.
Outdoor cannabis farms harvest their product once a year in October, using the state’s spring and summer months to grow.
Curaleaf countersued Hello Farms, claiming the cultivator failed to deliver the product under the specifications in the contract. That suit was tossed by a judge in 2021.
Hello Farms alleged by Curaleaf not abiding by its contract, it lost money by having to seek new buyers as the prices fell. The suit also alleged it grew a larger harvest than planned in 2021 at Curaleaf’s urging, leaving it with a larger unsold inventory.
The case was eventually ended up in a jury trial in U.S. District Court. And that jury sided with Hello Farms in a ruling Wednesday, agreeing that Curaleaf, through its subsidiaries GR Vending MI LLC and Cura MI LLC, failed to live up to the contract terms and awarded Hello Farms $31.9 million.
Read more at Crain’s Detroit