Consumer Fraud Class Actions Are Increasing in the Cannabis Industry – And More to Come With Intermediate Sales | So Good News

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Duane Morris Takeaways: Marijuana products — such as vapes, pre-releases, tinctures, gummies, and drinks — are consumer packaged goods that are required under federal law to be sold and labeled to indicate their safety to consumers. Although the state-licensed cannabis industry in the United States has been one of the fastest growing industries in the US over the past decade, consumer fraud lawsuits stemming from alleged labeling and labeling problems are a common threat to CPG manufacturers. in other industries. , so far, has not been a major factor in the sale of cannabis. However, this is changing. As three recent cases show, consumer fraud may be on the rise in the marketplace. Since media coverage like this attracts, and harms thousands or millions of potential users, the cannabis supply chain needs to take notice. As explained below, this will be especially true if cannabis products are allowed to be sold between countries.

Important News

In Centeno et al. v. DreamFields Brands Inc., and Med for America, Inc., a group of consumers who filed a lawsuit on October 20, 2022, in the Superior Court of California in Los Angeles County, representing two independent groups filed a lawsuit against the manufacturers of pre-rolls known as Jeeter on behalf of “all the people who , I am in the State of California and within a limited period of time, I have purchased one or more Jeeter Products.” The complaint alleges that representatives of the putative class purchased various links manufactured under Jeeter’s name based on the high THC potency claimed in the labeling of such products, but the products were lower in THC than what was listed. Since products with a high THC concentration are more expensive than those with a low THC concentration, the putative class representatives say they paid money they would not have paid if they had known the true THC strength of the Jeeter products they purchased, thus suffering financial hardship. a loss that needs to be healed. Their complaint alleges that “millions of other buyers” bought Jeeters that had already been toppled and lost the same fortune. As the complaint states:

If the Defendants tell the truth – that is, the THC content is much lower than what is represented on the label – the price of its Products will drop significantly. If consumers knew the truth – that the Products contained less THC than the label stated – Defendants would not be able to sell their Products at their current prices. Indeed, as mentioned above, cannabis products with lower declared THC content are sold for less than the declared THC content. Therefore, if Plaintiffs had been truthful about the THC content in their products, they would have had to lower the price, and Plaintiffs and class members would have paid less.

In addition to seeking damages against themselves and the group of “millions of consumers” that have been paid for pre-rolls known as Jeeter’s name, the putative class representatives are also seeking punitive damages, attorney’s fees, and injunctive relief against the alleged fraudsters. filing under California’s unfair competition and false advertising laws, as well as various common law claims.

We previously wrote about several separate lawsuits filed against Curaleaf, the largest US cannabis producer in 2021, due to Curaleaf’s mislabeling of tinctures containing THC that were sold as containing CBD. One of the events, Williamson v. Curaleaf, Inc., which was filed in the US District Court for the District of Oregon on May 30, 2022, was reported last week to have paid $150 to $200 in damages to nearly 500 people who allegedly ate the wrongly labeled content. Curaleaf tinctures. As a class action complaint is filed Centeno because of Jeeter’s pre-rolls errors, the Williamson group’s complaint sought damages, punitive damages, and attorney’s fees under Oregon’s unfair trade practices act.

In addition to Centeno and Williamsonwe have already written about Plumlee v. Steep Hill Inc.. Centeno, arose out of allegations that operators lied about the amount of THC in their marijuana products. As in CentenoPlumlee looks for damages in the classroom to destroy the economy, i.e, overpayments for mislabeled items, and as in Centeno and Williamson, Plumlee seeks punitive damages and attorney’s fees for fraudulent misrepresentation. Interestingly, while the claims in Plumlee are valid for consumer fraud, Plumlee alleges that the defendants conspired to create an enterprise in violation of the Racketeer Influenced and Corrupt Organizations Act. As we’ve written before, these claims can easily be dismissed as consumer fraud.

Future Case Law

There are a number of reasons why the fraudulent community of cannabis consumers may not have been attractive to the opposition in recent years. First, since cannabis products can be produced and sold in the same place, the size of the class and the amount of damage is limited to consumers in one state, unlike the kind of international activity that one sees with other CPGs. . Indeed, Centeno, Williamsonand Plumleesubmit claims on behalf of one national group.

Second, many state cannabis markets have just started – in the last few years – they have started to grow into markets of thousands or even millions of buyers, so a single state group a few years ago would have been too small to approve sales. for expensive cases filed by plaintiffs’ counsel.

Third, and similarly, the pockets of the defendants are much deeper today due to the increase in sales over time compared to a few years ago. For these reasons, the continued growth of government cannabis markets may lead to fraud in the cannabis consumer community.

However, the centralization of cannabis products has changed the number of threats from consumer fraud groups.

If the sale of cannabis products is legalized, the sale and distribution of large quantities of cannabis products to consumers in multiple states, if not nationally, will open the door to allegations that have been made nationally that cannabis sales are mislabeled. While such claims can be proven under consumer fraud laws, they can be made on behalf of consumers across the country, creating greater transparency in the cannabis industry. i.e. growers, processors, labs, and dispensaries, for economic loss and punitive damages, as well as attorney’s fees. These types of complaints are regularly filed by plaintiffs on behalf of national classes for mislabeling of other CPGs, and no doubt this bar will have cannabis products in their eyes when they start selling cannabis.

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