A chain of Michigan marijuana retailers is exploiting the federal marijuana ban to attempt to void its contract obligations with a supplier. A supplier alleges that it failed to pay for marijuana the retailer had contractually agreed to buy, and the retail chain says courts can’t enforce a contract involving illegal activity.
If successful, this argument could massively disrupt state-regulated marijuana markets. It’s another example of why Congress needs to resolve this discrepancy in federal and state marijuana laws.
Cura MI, a Michigan subsidiary of Massachusetts-based Curaleaf Holdings, signed a contract in 2020 agreeing to purchase the 2020 and 2021 harvests of its local supplier and cultivator, Hello Farms. Cura MI accepted roughly 53,000 pounds of this marijuana, but now says it doesn’t have to pay its supplier because federal courts can’t enforce a contract that involves illegal activity.
By early 2021, Cura MI was already allegedly failing to make payments, and Hello Farms sued Cura MI in a Michigan court, hoping to collect roughly $32 million that the retailer had agreed to pay. Michigan’s marijuana laws make clear that contracts between licensed marijuana businesses are enforceable in Michigan (see MCL ยง 333.27960).
So, an observer might assume that none of this is a federal matter. However, because Cura MI is owned by a Massachusetts-based parent company, Curaleaf Holdings was able to petition in March 2021 to remove the proceeding to federal court because the dispute is between residents of different states.
Read more at Reason Foundation
