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CPC of Missouri-Smithville, LLC and GF Saint Mary LLC, Missouri-licensed cannabis cultivators and manufacturers, filed a class action lawsuit in the Circuit Court of Jackson County on behalf of independent wholesalers alleging they have been harmed by a deliberate, coordinated, and unconstitutional scheme by Good Day Farm (GDF) and the network of companies and investors with which it conspired. The complaint alleges the “GDF Cartel” owns, controls, or manages an illegally high share of the state’s dispensary licenses and uses this market power to manipulate Missouri’s $1.52 billion cannabis market for its own gain.
GDF and its co-conspirators allegedly built the Cartel by arranging for third parties to invest in limited liability companies (LLCs) that then acquire additional dispensary, cultivation, and processing facilities, all of which are owned, managed, or controlled by GDF. The result: the alleged Cartel currently exercises effective control over at least 61 dispensaries—nearly triple the 22 permitted under the Missouri Constitution’s requirement that no more than 10% of dispensary licenses be under “substantially common control, ownership or management.” With 224 dispensaries currently licensed statewide, the alleged GDF Cartel controls more than one in four dispensary licenses in Missouri. But its impact is even greater as the alleged Cartel’s dispensaries account for upwards of 40% of wholesale cannabis purchased in the state, giving it enormous—and illegal—leverage over every independent cultivator and manufacturer forced to sell through its network.
To circumvent the 10% licensing cap in the Missouri Constitution and evade regulatory oversight, the alleged Cartel operates under five different brand names:
But they are all part of a single coordinated operation that the complaint alleges consistently colludes to:
Bob Hoffman, one of the lawyers leading the litigation, said: “The GDF Cartel is suppressing competition in the wholesale cannabis market and enriching itself with illegal profits through an unconstitutional and clandestine business conspiracy. Missouri’s cultivators and manufacturers have been suffering under this scheme for too long—many of them know something is wrong but don’t realize the scope of the Cartel’s market manipulation. We filed this suit to restore the fair, competitive marketplace that Missourians voted for when they approved recreational cannabis in 2022. Missouri-licensed cannabis companies who have experienced these practices should join us, as they may be entitled to significant damages.”
The complaint alleges the financial toll the Cartel has inflicted: since the Cartel began its illicit price fixing, it has used its collective market power to depress wholesale prices by more than 20%, and it continues to squeeze wholesalers and threaten the viability of their operations.
The antitrust complaint alleges that GDF knew that its cartel-building scheme could pose legal risks to the company under the Constitution’s 10% licensing cap. The complaint quotes from a document GDF provided to potential investors that states: “Assurances cannot be made that the Missouri Department of Cannabis Regulation will not take issue with the number of marijuana dispensaries operated or supervised by the Manager or its affiliates…”
This action is brought on behalf of a putative class that includes all independent Missouri-licensed wholesalers who are not members of the alleged GDF Cartel for purposes of injunctive relief. Wholesalers who believe they have been financially harmed by the alleged Cartel’s practices should join the case as they may be entitled to significant damages. The putative class is represented by the law firms of Feuerstein Kulick LLP and Bryan Cave Leighton Paisner LLP.
Source: Feuerstein Kulick LLP and Bryan Cave Leighton Paisner LLP
Frontpage photo: © Olegmalyshev | Dreamstime
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