John Schroyer
Cannabis testing and labeling fraud in the form of inflated THC numbers is a rampant industry problem, and it might actually get its day in court – or at least force some businesses to pay settlements and reform their ways, depending on how a half dozen active class action lawsuits play out in coming months.
The lawsuits were filed by California law firm Dovel & Luner, which has six active cases on the issue. (A seventh case was dismissed in April at the request of the plaintiff).
The firm won a significant victory on a demurrer motion in June, when a judge ruled that the defendant in one case – DreamFields Brands, the makers of the popular Jeeter product line – couldn’t simply blame the testing lab for inaccurate labels that had the wrong THC percentages.
“Defendants are not immune from liability simply because they parroted third party misrepresentations,” the judge in the case wrote in the demurrer ruling. The next hearing in that case will be in February 2024, according to court records.
Though that decision is a long way from a full legal victory, it means that there’s now legal precedent closing off that plausible deniability for brands. And the high-profile companies already facing class actions from Dovel & Luner include:
- Greenfield Organix, a subsidiary of StateHouse Holdings and the makers of the King Roll brand. A hearing was held yesterday in this case.
- Lowell Farms and Cypress Manufacturing Co. A hearing is scheduled for July 31.
- Four Star Manufacturing. A hearing is scheduled for Aug. 4.
- Falcon Brands, the makers of Littles, Jetpacks, and CRU Cannabis. A hearing is scheduled for Aug. 11.
- Ironworks Collective and STIIIZY, one of the most high-profile cannabis brands in California. A hearing is scheduled for April 19, 2024.
The recent ruling – and the potential outcomes of all the suits – could have ripple effects for the so-called “lab shopping” phenomenon within the industry, where companies that have flower or pre-rolls or other products that depend on high-THC numbers hop from testing lab to testing lab to see which of them will deliver the highest THC results, which they’re then allowed to advertise on their packaging.
Dovel & Luner has filed all of its class actions just since October, and is actively seeking both class participants for each of them as well as more such potential fraud cases to take up.
“We often partner with other law firms on consumer class actions. If you are a lawyer looking to partner on or refer out a class action, please reach out,” attorney Christin Cho, a partner at Dovel & Luner, wrote on LinkedIn last month in a post celebrating the demurrer ruling.
Cho also told Green Market Report in an email that another similar demurrer attempt – by Greenfield Organix – was thrown out by a judge just this month, meaning that case will also proceed.
There’s already been one similar case filed outside of California, in Arkansas, though that lawsuit is in limbo due to a request to remove it from state court to federal court, according to records.
But with both the industry on the rise nationally, as well as the number of participants, it’s a near surety that there will be more cases of THC fraud in the works, and lawsuits to follow. Which means businesses will start having to take their own liability into account, if they don’t already.
