![]() ![]() No matter the case, Vicente Sederberg's Nash does not see much of the industry at risk, noting a largely industry-wide compliance to state and federal rules. "I believe cannabis is very low on the list of priorities for the Federal Government," said Morgan, noting that regulators "Have much bigger concerns to address." Matthew Morgan, a cannabis industry advisor who has helped co-found several brands, including Ignite International Brands Ltd BILZF and Green Axis Capital, views Arkansas as an isolated incident. However, they believe that some form of punishment is needed to deter any industry long-struggling with mislabeled products.īrown feels additional charges will come to brands alleged of knowingly misrepresenting products. Most proffessionals Benzinga spoke with indicated they felt that RICO charges were extreme in cases like the four Arkansas operators. “"The regulators look at the results, chromatograms and data but not how the data is gained or gathered," he said, adding the status quo breeds contempt for the program's rules and regulations. ![]() He reports losing “significant business” as companies seek to work with labs providing the most favorable THC and cannabinoid profile results.īrown pointed to certain state budgets that prevent adequate enforcement. Roger Brown, president and founder of ACS Laboratory said the sources of mislabeled products come from growers and suppliers seeking labs willing to produce higher THC results. Just 24% of products were accurately labeled, with in-store products averaging 21% more CBD than advertised.įrom labs to sales shelves, the willingness to misrepresent products appears to stem from a desire to appeal to customers and stay in business. Only 89 of the products listed CBD potency on the label. In 2022, Johns Hopkins Medicine researchers tested more than 100 OTC CBD products.A 2017 Penn University analysis of CBD products sold online found fully 70% were mislabeled.In recent years, the CBD space has found itself in the crosshairs of damning studies: Mislabeling has been an ongoing issue with various cannabinoids. However, he said “the suit pivots from the traditional angles to attack a trending issue: the inflation of THC claims in cannabis products.” Wu said that the Arkansas case follows similar charges regarding the illegal status of cannabis operations. Win, and the company must face expensive legal bills.įacing expensive outcomes either way, Wu noted that many cannabis brands opt to settle before reaching court. If a company loses their case, it can be on the hook for up to 3x the damages. Still, the cost of fighting charges can be staggering, making it a common tool of anti-cannabis movements and individuals. Small said most federal RICO civil suits are dismissed with a small fraction resulting in settlements or judgments against the defense.ĭespite the reported low success rate, RICO charges can damage acquitted parties.Ĭlark Wu, Esq., an attorney for Bianchi & Brandt, said "cookie-cutter allegations" with focuses on security or nuisance-type charges, like alleged odors, have not fared well in court. "The reality is federal RICO Act civil suits are very costly to initiate and prosecute and very difficult to win," said Craig Small senior attorney at Clark Hill's Denver office. Victory for the prosecution comes at a cost as well. ![]() In May 2020, 226 Orgeon cannabis companies beat racketeering charges filed by a woman claiming that a nextdoor cannabis processor had harmed her in some way in 2018. Recent examples include a California federal judge acquitting a cannabis company on charges of moving products on a shared road in Santa Barbara County, with the judge noting the county failed to demonstrate the harm it experienced. Nash added that RICO cases against cannabis companies have traditionally not fared well for the Feds, “due to the many elements that comprise the cause of action.” “As long as cannabis remains federally illegal, there is always some risk that aggrieved individuals will seek to use the RICO statute as a basis for asserting claims against cannabis brands.” Meg Nash, counsel for firm Vicente Sederberg is also concerned about federal law. ![]() "All cannabis companies should fear the potential of federal organized crime-type charges," said Papa & Barkley CEO Guy Rocourt, noting the ongoing federal laws against cannabis. ![]()
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