Curaleaf Challenges $31.8 Million Verdict, Citing Contract Illegality

In a high-stakes dispute within the cannabis industry, Curaleaf Holdings Inc.’s subsidiaries, GR Vending MI, LLC, and Michigan Wellness Partners, Inc., are seeking to overturn a $31.8 million jury verdict awarded to Hello Farms Licensing MI, LLC. The Michigan federal jury found that Curaleaf’s subsidiaries had breached their contract with Hello Farms, leading to substantial financial harm to the cannabis farm. However, Curaleaf now argues that the agreement at the center of the lawsuit was illegal under state law, making it unenforceable and rendering the damages award invalid.

The Jury Verdict and Allegations

The case stems from a business relationship between Hello Farms and Curaleaf’s subsidiaries. Hello Farms alleged that Curaleaf’s entities failed to fulfill their contractual obligations, resulting in significant losses. In January 2025, a jury ruled in favor of Hello Farms, awarding nearly $31.8 million in damages. The verdict was meant to compensate for the losses allegedly incurred due to the breach of contract.

Hello Farms argued that Curaleaf’s companies engaged in unfair business practices, failing to honor agreements that were crucial for its operations. The jury agreed with Hello Farms’ claims, delivering a verdict that signified a major victory for the cannabis farm. However, Curaleaf quickly moved to challenge the ruling, setting the stage for a heated legal battle over the enforceability of the agreement.

Curaleaf’s Challenge: The Legality of the Contract

Shortly after the verdict, Curaleaf’s subsidiaries filed a motion to overturn the jury’s decision, arguing that the contract itself was illegal under Michigan law. If the court determines that the agreement was unlawful, it could nullify the damages award entirely.

In its motion, Curaleaf contended that state cannabis regulations prohibit the type of contract entered into between its subsidiaries and Hello Farms. The company claims that enforcing an illegal contract would violate public policy, making the jury’s verdict legally untenable. The argument hinges on the specifics of Michigan’s cannabis laws, particularly regarding how business agreements in the industry must be structured to comply with state regulations.

Hello Farms’ Response: Accusations of Asset Transfers

In response to Curaleaf’s attempt to overturn the verdict, Hello Farms has urged the court to enforce the $31.8 million award, including interest. The farm maintains that the contract was valid and that Curaleaf is attempting to evade its financial responsibilities.

Adding another layer of complexity to the dispute, Hello Farms has also accused Curaleaf of attempting to shield its assets to avoid paying the damages. In a separate legal filing, Hello Farms claimed that Curaleaf began selling off assets even before the verdict was reached, potentially as a way to make it more difficult for the farm to collect on the judgment. If these allegations hold up in court, they could influence the judge’s decision regarding enforcement of the jury award.

What’s Next?

The case now hinges on the court’s determination of the contract’s legality. If the judge finds that the contract was indeed unlawful under Michigan’s cannabis laws, the jury’s verdict could be invalidated, saving Curaleaf from the massive financial penalty. On the other hand, if the court upholds the contract as valid, Curaleaf will likely have no choice but to pay the $31.8 million in damages.

The ruling could have broader implications for the cannabis industry, particularly in Michigan, where regulatory compliance is a crucial issue. If Curaleaf succeeds in having the verdict overturned, it may set a precedent for similar disputes, potentially making it harder for cannabis companies to enforce business agreements in court. However, if the court sides with Hello Farms, it would reaffirm the enforceability of contracts within the industry, providing more legal certainty for businesses operating in the space.

With the court set to make a critical decision, this case could shape the future of cannabis-related contract disputes in Michigan and beyond.