Federal Appeals Court Reverses $31.8M Cannabis Contract Verdict
The Sixth Circuit reversed a $31.8 million marijuana contract verdict in a key federal case.
Why it matters: As more states legalize cannabis, evolving federal case law highlights risks for cannabis contracts and liabilities. Legal professionals must watch how federal courts handle conflicts between state laws and the Controlled Substances Act.
- $31.8 million breach of contract verdict overturned by Sixth Circuit on Sept. 10, 2026.
- Case involved Michigan cannabis producer Hello Farms and Curaleaf subsidiaries' 2020 supply contract.
- Hello Farms grew 16,300 pounds of marijuana; initial shipment of 2,000 pounds was accepted before rejection.
- Court ruled enforcing the contract violated the federal Controlled Substances Act despite state legalization efforts.
On September 10, 2026, the U.S. Court of Appeals for the Sixth Circuit overturned a jury’s $31.8 million award to Hello Farms Licensing MI, a Michigan marijuana grower. The case hinged on a 2020 supply agreement between Hello Farms and two Curaleaf Holdings subsidiaries, GR Vending MI and CURA MI, which agreed to buy all marijuana from Hello Farms’ 2020 and 2021 harvests.
Hello Farms produced roughly 16,300 pounds of marijuana that year, but after delivering about 2,000 pounds, GR Vending declined further shipments due to falling market prices. The jury initially ruled in Hello Farms’ favor for breach of contract damages.
The Sixth Circuit reversed, emphasizing that "on the face of the contract, the parties promised to commit felonies," referencing the federal Controlled Substances Act, which still prohibits marijuana. The court held that federal courts cannot enforce contracts based on illegal conduct, noting that federal protections for state medical marijuana programs and the 2026 reclassification of some marijuana to Schedule III did not apply retroactively to this case.
This ruling underscores the ongoing tension between state cannabis legalization and federal prohibition. Even as Michigan legalizes marijuana commerce, federal courts continue to block enforcement of cannabis contracts that conflict with federal law. For legal professionals advising cannabis businesses, this case highlights the persistent legal risks around contract enforceability and federal compliance.
Legal experts should monitor developments in cannabis litigation as the industry grows and federal versus state law conflict remains unresolved.
More on the Sixth Circuit decision at Law360.By the numbers:
- $31.8 million — jury award initially given to Hello Farms
- 16,300 pounds — marijuana produced by Hello Farms in 2020
- 2,000 pounds — initial shipment accepted by GR Vending before refusal