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Oregon Cannabis Litigation: Cura Hit with $10 Million Class Action

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cura curaleaf class action thc

It has been a tough stretch for Portland-based Cura Partners, Inc. (“Cura”) and its parent company, Massachusetts-based Curaleaf Holdings, Inc. (“Curaleaf.”)

Cura produces the popular Select brand of THC vaping products and was declared Oregon’s first “cannabis unicorn.” In May of 2019, Cura announced its sale to Curaleaf for more than $1 billion in an all-stock transaction. Around the same time, Curaleaf announced it would pay some $875 million, mostly in stock, to acquire a Chicago based cannabis company, Grassroots. These deals made Curaleaf one the world’s largest marijuana companies. Sounds good right?

It didn’t last long. One year ago today, Curaleaf was hit with an FDA warning letter for “illegally selling” CBD products and making health claims about those products. That was followed by a class action securities lawsuit alleging that Curaleaf made knowingly false statements to the investing public. Shortly after, Curaleaf was fined $250,000 by the State of Massachusetts for failing to disclose change of ownership to state regulators. You can find our comprehensive analysis on that brutal stretch here.

Things don’t seem to have improved much for the Curaleaf family of companies in 2020. In January, Cura paid a record $110,000 fine for mislabeling products in Oregon, and found itself defending a class-action lawsuit alleging it mislabeled cannabis products. In February, the vaunted $1 billion Curaleaf deal finally closed, but for a cash payment of $285 million for 55 million shares, and other incentive bonuses. By March, Curaleaf’s shares had dropped to $2.75/per, down from $6.31/per to start off the year.

Although the share price has since recovered to match last July’s peak, last week another large lawsuit was filed against Cura, Curaleaf’s newly minted acquisition. This one is $10 million class action, styled as Blackford v. Cura CS, LLC, No. 20CV25203. The lawsuit was filed on the same day that Curaleaf announced the closure of its deal with Grassroots for approximately $830 million. (Email me if you’d like a copy of the complaint.)

The gravamen of the complaint is the allegation that the Select Elite brand of THC vape products “do not contain anywhere near the quantities of THC advertised.” According to the plaintiff, independent lab testing reveals that the Select Elite products contained only 55% THC despite promising (on labels and other advertising) that they would contain 76.9% THC. Industry watchers know that mislabeling is a common problem in the cannabis industry, but 76.9% to 55% is quite a spread.

Plaintiff seeks relief individually, and as a class action on behalf of similarly situated purchasers of Cura’s products, for: (i) breach of express warranty; (ii) breach of the implied warranty of merchantability; (iii) unjust enrichment; (iv) fraud; and (v) violation of Oregon’s Unlawful Trade Practices Act (“UTPA”), ORS 646.605, et seq. These are the usual claims in any class action; notably, the trade practices claim permits an award of attorneys’ fees as well as statutory damages. (See here).

Plaintiff seeks to certify a class comprised of all persons who purchased Select Elite THC Products in Oregon. But this lawsuit may be just the beginning, as Cura sells its Select Elite products in more than 900 dispensaries, including in California. I would expect enterprising plaintiff’s attorneys to look into similar actions in other states where Select Elite products are sold.

Over the years, we have seen similar class action lawsuits concerning CBD products to the lawsuit filed last week against Cura. It is no surprise that these lawsuits target the largest players in the hemp and marijuana industries. (See here). But class action lawsuits are not confined to multi-state operators, particularly in states where unfair trade practices law allows a plaintiff to seek her attorneys’ fees. Anyone involved in the manufacture or sale of THC products is a potential defendant and at risk of not just civil lawsuits, but action by state regulators.

For past blog coverage on Curaleaf, check out the following:

Source: https://harrisbricken.com/cannalawblog/oregon-cannabis-litigation-cura-hit-with-10-million-class-action/

Cannabis

Current Research on Effect Specific Uses of Cannabis

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New research regarding the benefits of cannabis and its main properties of CBD and THC continues to emerge as more countries and states legalize the medical and recreational use of marijuana. Also, because of legalization, the business potential of the cannabis industry continues to grow. Cannabis companies can now distribute to a broader range of people. However, there is more to cannabis than different strains (Indica or Sativa) or the ratio of CBD to THC. Another essential cannabinoid is terpenes, and they play a critical role in the effectiveness of cannabis.

A Perfect High

As the cannabis industry continues to enter the mainstream sphere, it must determine how to market to the mass consumer who expects their cannabis product to be consistent in quality and give off the desired effect. Consumers search for a product that provides a more tailored experience and a more controlled high. Like how the consumer can pick their alcohol to achieve desired effects, cannabis companies and scientists research ways to deliver a custom product. Before a consumer buys a product, they need to know if the product’s cost matches the quality of the experience.

THC causes impairment, slower reaction time, and difficulty performing simple tasks. Consumers want to control their level of buzz. Just like there is a wide variety of alcohol, each with its flavors, and proof, that allows a consumer to have their own unique experience. Cannabis companies strive to achieve a range of products that can mimic the desired effect, from calming to energetic or happy. Consumers also want to test how their body responds to these products to make the most informed decision about what is right for their needs and works best for them.

Ultimately, scientists continue to learn about the importance of terpenes and CBD to modify THC’s effects. The largest cannabis companies and their teams of scientists keep their research under wraps for competitive reasons. Every company wants to be the first to produce a controlled, tailored product. Whoever discovers this first will have an advantage within the cannabis industry.

The Entourage Effect

Cannabis companies and scientists ultimately want to achieve a way to tame THC, a term first introduced by scientist Ethan Russo in 2011. They estimate the cannabis industry will grow as large as the alcohol industry and generate billions of dollars in revenue a year, but only if they can manufacture a product that consistently delivers. In 1998, scientists Raphael Mechoulam and Shimon Ben-Shabat discovered the entourage effect, or the combination of THC, the psychoactive component, CBD (cannabidiol), an active non-psychoactive ingredient, and terpenes, the flavor and taste profile of each strain. All three elements have a unique effect on the body, depending on each ingredient’s ratio and combination.

However, with just the cannabis plant, it is hard to replicate the same feeling and its effects on the body since each plant, grown from different marijuana seeds, has its unique properties. Scientists continue to try and isolate these components to learn better ways to use them as a controlled substance. Also known as whole plant synergy, the main ingredients THC, CBD, terpenes, and other cannabinoids are also essential to unlock the health benefits of cannabis and how to use each ingredient to treat chronic pain and diseases better.

Evidence shows that cannabinoids boost other cannabinoids; for example, THC enhances CBD’s medicinal properties, while CBD modifies and controls the effects of Eagle Moon High THC Seeds, producing a more controlled high. Each cannabinoid is more effective together, which is why THC alone or CBD only products derived from hemp are less potent and effective. There are also other minor cannabinoids at play, such as CBG or CBN, that scientists continue to research. Emerging research also suggests the possibility of two different types of entourage effects: Intra-entourage refers to the interactions of cannabinoids and terpenes and inter-entourage, which relates to the interactions between terpenes to terpenes and cannabinoids to cannabinoids. However, research slowly begins to unearth the role terpenes play in the entourage effect and its full potential.

Terpenes and Future Potential

Cannabis consumers are more sophisticated than society’s perpetuated stereotype of the stoner or hippie. Consumers want to know about the benefits and properties of cannabis, such as Indica versus Sativa, and THC versus CBD. While they may be more familiar with these terms, terpenes are a newly discussed topic amongst cannabis circles, and consumers and scientists alike want to unlock terpene’s full potential. Scientists describe terpenes as the flavor profile in all plants but specifically provide each cannabis strain with its taste and smell.

Researchers today understand that the properties of terpenes go beyond just flavor, smell, and stimulating moods, but modulating brain activity that can have potential health benefits. CBD and THC have higher potency together, and the same is true that terpenes, along with other cannabinoids, work better together and have a more substantial impact. Terpenes and cannabinoids can increase blood flow, enhance motor and sensory functions, and eliminate respiratory bacteria that cause MRSA. The terpenes and cannabinoid attribute to the effectiveness of marijuana or cannabis products in the treatment of chronic pain, inflammation, depression, anxiety, and even fungal and bacterial infections.

 

Companies define the use of cannabis for medicinal or holistic reasons, by the strain or CBD to THC ratio. However, new research suggests that the terpene profile may be one of the most critical elements in the effectiveness of the strain and its intended use. As the cannabis industry and scientists compete to unlock the potential of terpenes and its connection to THC, CBD, and other cannabinoids, consumers will gain access to a marijuana experience unlike anything before.

 

AUTHOR BIO:
Crystal Wilson. Crystal has been closely studying the cannabis industry trends for quite some time. Intrigued by the booming growth of this sector, she takes interest in penning down her views providing quality insight on current marijuana trends, particularly medical cannabis.

 

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Jay-Z announces new line of cannabis products dubbed Monogram

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Rapper and entrepreneur Jay-Z is launching his own cannabis brand in partnership with Caliva, the California-based weed company that hired the star as its chief brand strategist last year. 

Named Monogram, Jay-Z’s line of marijuana products launched its website and social media accounts on Friday.

“Monogram marks a new chapter in cannabis defined by dignity, care and consistency. It is a collective effort to bring you the best, and a humble pursuit to discover what the best truly means,” Monogram’s website highlights.

No further information on the specific products that will be sold under the Monogram brand has been released yet. 

However, according to the website, the flower used in Monogram’s products is grown in small batches, with a board of “cannabis experts” tasked with grading and hand-selecting each flower that goes into the line. 

The New York rapper joined Caliva in 2019 as a brand strategist, which entailed overseeing the creative direction of the company. Furthermore, Jay was focused on Caliva’s social equity efforts as he aimed to increase economic participation of people disproportionately harmed by marijuana prohibition in the newly legal industry. 

As for when consumers can expect to try Jay-Z new products, a spokesperson told the New York Daily News Monogram still hasn’t set its dispensary release schedule. The line will “definitely be available across all of California,” according to the spokesperson.

In other news, basketball star Shawn Kemp who played for the Seattle SuperSonics is also showing his love of pot. Kemp is set to open Seattle’s first black-owned marijuana dispensary this Friday. The Sonics legend named his dispensary Shawn Kemp’s Cannabis and is hoping to serve as a model for others in the black community who might be interested in foraying into the legal marijuana business in the area. 

“I’m looking forward to welcoming Sonics fans on a regular basis, starting with opening day. I hope that Shawn Kemp’s Cannabis will be an inspiration for people to get involved with the legal cannabis industry, especially people of color,” the Reign Man said in a press release. 

Source: https://greencamp.com/jay-z-announces-new-line-of-cannabis-products-dubbed-monogram/

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Analysis: Legal weed in Texas would generate over $500 million in tax revenue per year

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Legalizing marijuana in Texas could generate over half a billion dollars in tax revenue per year and create more than 40,000 new jobs, according to the results of a report released by Vicente Sederberg LLP earlier this month. 

Legal cannabis sales in Texas would reach about $2.7 billion annually based on the fact that there are more than 1.5 million residents over the age of 21 that consume pot on a monthly basis, the analysis calculated. 

The estimated tax revenue was calculated under the assumption Texas would tax marijuana sales at the same rate as Colorado at 20.6%. This would amount to $1.1 billion in taxes per biennium, while Texas could collect an additional $10 million per year through the issuing of marijuana business licenses.

The report notes Colorado has raised nearly $13 million on average per year just from license and application fees. Furthermore, the report indicated that current taxpayer dollars that go towards marijuana arrests and prosecutions amount to $311 million per year – money that Texas would save should it legalize pot.  

“States across the country are seeing the benefits of legalizing and regulating cannabis. It is inspiring lawmakers in prohibition states to reexamine the efficacy and costs of their current policies and take a closer look at the alternatives,” said Shawn Hauser, a partner at Vicente Sederberg.

“The goal of this report is to provide a snapshot of the economic benefits Texas would experience if it started treating cannabis more like alcohol for adults 21 years of age and older,” he commented on the new report

Aside from the tax revenue that legal weed in Texas could generate, the report highlighted marijuana’s job creation potential. An estimated 20,000 to 40,000 new jobs would be available in the newly legal industry, with tens of thousands of additional indirect positions, the report estimated.  

Hauser also pointed out the added economic benefits of legalization in Texas given current uncertainties provoked by the coronavirus pandemic.

“Texas is leaving an enormous amount of money on the table by keeping cannabis illegal,” according to him. 

Texas was once known for having the strictest drug laws in the U.S., but the state has softened its stance on cannabis in recent years. A very limited medical marijuana program was established in 2015, while, more recently, cannabis possession arrests in the state have been significantly declining after hemp became legal.   

Source: https://greencamp.com/analysis-legal-weed-in-texas-would-generate-over-500-million-in-tax-revenue-per-year/

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