 Cannabis Business Times reported that four medical marijuana companies have just been served with a federal racketeering lawsuit.
The issue at stake are the THC levels listed on labels. The plaintiffs allege that the four companies in question worked together to purposely elevate the THC levels on labels which were sold to medical patients. The companies being sued include Natural State Medicinal, Bold, Osage Cultivation, and predominately, Steep Hill Arkansas along with it’s parent company Steep Hill Inc. The lawsuit originated with the plaintiffs suspicion that the THC levels of the cannabis were not accurate according to the labels. Don Plumlee, Jakie Hanan and Pete Edwards, said in the lawsuit that, over time, they noticed “that some marijuana was more potent than others, despite being labeled as having similar amounts of THC.” The plaintiffs decided to take products purchased from the licensed dispensaries to be independently tested for THC levels. They said their results showed that THC levels were inflated by an average of 25%. Higher THC levels can be sold for higher prices, so consistently marking up the THC levels would lead to higher sales revenue than would be generated if labeled accurately. The lawsuit alleges that the growers conspired and worked with Steep Hill Arkansas to generate labels showing the inflated THC levels, which is a violation of the RICO Act, which stands for Racketeer Influenced and Corupt Organizations Act. They write in the suit, “Defendants used the telephone, email, or other communication facilities to take steps in furtherance of their efforts to unlawfully sell marijuana that had been mislabeled hundreds of times. “ “The RICO defendants together formed an open ended association-in-fact enterprise for the purpose of cultivating marijuana in Arkansas and selling it to dispensaries in Arkansas for purchase by the plaintiff. To that end, they pooled their resources, knowledge, skills, and labor to achieve through the enterprise efficiencies in the cultivation and distribution of marijuana that none of them could have achieved individually.” Comments are closed.
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