Federal Lawsuit Filed Against Medical Cannabis Companies in Arkansas

A testing lab and multiple cannabis cultivators in Arkansas are being targeted by a federal lawsuit alleging deceptive trade practices; the lawsuit claims the businesses are subject to the Racketeer Influenced and Corrupt Organizations (RICO) Act because cannabis remains federally outlawed.

Full story after the jump.

A federal lawsuit filed in Arkansas is seeking to use the Racketeer Influenced and Corrupt Organizations Act, commonly known as RICO, to target medical cannabis companies plaintiffs accused of deceptive trade practices, WREG reports. The lawsuit names California-based cannabis testing laboratory Steep Hill, Inc., its Arkansas subsidiary, Steep Hill Arkansas and its co-owners Dr. Brandon Thorton and Brent Whittington, cannabis cultivators Osage Creek Cultivation, Bold Team LLC, Natural State Medicinal, and “John Does 1-10,” which are law firms, accountants, and financial firms that assisted medical cannabis companies. 

The lawsuit claims some medical cannabis was sold in Arkansas with a potency different than what was advertised – a deceptive trade practice – and that cannabis businesses are subject to RICO because cannabis is federally outlawed.  

“Enjoining the RICO Defendants from continuing to engage in racketeering activities to enforce strong federal policy that seeks to reduce the cultivation and distribution of medical marijuana through a complete prohibition on those activities.” — the lawsuit’s Prayer for Relief section 

If successful, the lawsuit could end medical cannabis operations in Arkansas.

The plaintiffs claim that some of the cannabis they bought seemed less potent than others and sent it off to be tested. The test results showed that some of the products had 25% less THC than what was advertised and, in one case, up to 52% lower.

“Marijuana businesses who market their products as medicine should be held to reasonable production standards to ensure this ‘medicine’ is effective,” the plaintiffs contend. “But Defendants have intentionally refused to implement reasonable production standards, instead preferring to do business with Steep Hill that regularly intentionally inflates the amount of THC in its customer’s flower. The net effect is to defraud the Plaintiff and putative clause by over-representing the amount of THC in flower to the detriment of the Plaintiff and Class so that Steep Hill, the cultivators, and the dispensaries can make more money.” 

The lawsuit is filed in the U.S. District Court for the Eastern District of Arkansas. 

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