Georgia Lawsuit Accuses 12 Cannabis Companies of Misleading Consumers About Delta Products

The legal action presently under consideration brings forth a series of grave accusations against the defendants, articulated through a meticulously structured array of charges. These allegations encompass negligent misrepresentation, a charge that implicates the defendants in the dissemination of inaccurate or misleading information without due diligence or reasonable care. Furthermore, the lawsuit advances a claim of intentional misrepresentation, also known as fraud, accusing the defendants of deliberately and knowingly propagating false information with the intent to deceive. In addition to these serious allegations, the legal complaint includes a charge of unjust enrichment or disgorgement, suggesting that the defendants have improperly benefited at the expense of others, and thus, there exists a compelling moral and legal argument for the restitution of these ill-gotten gains. Finally, the lawsuit brings forth two charges of racketeering against the defendants, suggesting their participation in a coordinated effort to engage in or contribute to a business through repeated racketeering activities. This implies involvement in actions that are not only morally questionable but also violate established legal norms. These charges collectively underscore the severity of the accusations and the formal legal mechanisms being employed to address the alleged misconduct.

Georgia Resident Sues 12 Cannabis Companies for Misleading Product Sales

On the sixth day of February, an event of considerable legal significance was set into motion within the esteemed confines of the United States District Court, located in the sovereign state of Georgia. This legal action was initiated by Hannah Ledbetter, a resident of Georgia, who has courageously positioned herself in opposition to a collective of twelve entities actively engaged in the cannabis industry. These organizations, subject to this legal examination, include, but are not limited to, STIIIZY, LLC; Cookies Creative Consulting and Promotions; Cloud 9 Online Smoke & Vape, LLC; Green Rush LLC, known commercially as Xhale City; TheSY LLC, operating as Element Vape; Savage Enterprises; Delta Extrax; L&K Distribution; Columbia Laboratories; PharmLabs; Encore; and Pur ISO Labs LLC. The crux of the grievance lodged by Ms. Ledbetter asserts that each of the implicated firms has participated in the marketing and sale of cannabis derivatives under the misleading representation of delta hemp products, instead of acknowledging them as cannabis products in their true essence. Ms. Ledbetter is thus pursuing a claim for monetary compensation, amounting to the substantial figure of $150 million, a figure that mirrors the perceived gravity and expansive scope of the alleged malfeasance.

At the heart of Ms. Ledbetter’s allegations is the claim that she, alongside a potentially extensive cohort of consumers, was ensnared into purchasing products under the pretense that they conformed to federal legal standards applicable to hemp, specifically those containing a delta-9 tetrahydrocannabinol (THC) concentration of no more than 0.9%. Contrary to these assertions, it is contended that the products in question contained delta-8 THC, a variant that remains prohibited under the auspices of federal law. The lawsuit delineates this deceptive practice as a deliberate strategy orchestrated by the defendants to engage in the importation, manufacturing, distribution, and possession of illicit delta-8 THC vape pens, all the while cloaking them in the guise of legality as hemp-derived commodities. This purported scheme is depicted as having been feasible solely through a complex and systematic pattern of racketeering activity, a notion that serves to accentuate the seriousness of the allegations put forth.

The legal discourse surrounding this case draws upon terminologies and definitions as explicated by Justia, wherein a “racket” is identified as an individual instance of fraudulent service, and “racketeering” encompasses a broader spectrum of illegal enterprises, typically orchestrated collectively by an organized syndicate. The litigation is posited within the framework of the Racketeering Influenced and Corrupt Organizations (RICO) Act, which enumerates racketeering activity to include an extensive array of criminal offenses, from fraud to more egregious acts such as murder, kidnapping, substance trafficking, bribery, and beyond.

Ms. Ledbetter’s interactions with the contentious products reportedly took place at various retail outlets including Cloud 9, Element, and Xhale City (inclusive of Xhale Franchise), all strategically located in the vicinity of Atlanta, Georgia. She asserts that the delta-9 THC products procured from these establishments contained THC concentrations exceeding the limits sanctioned by federal law, implicating all the cannabis companies named in the lawsuit in the illicit manufacturing, distribution, and/or sale of cannabis products to a significant consumer base over an approximate duration of four years.

The legal complaint elaborates with precision the notion that consumers, under the mistaken belief that they were acquiring hemp-derived THC products compliant with legal standards, were in reality being furnished with illegal cannabis, a deception that purportedly culminated in the generation of millions of dollars in fraudulent profits. It is further alleged that the defendants engaged the expertise of third-party testing laboratories, notably Columbia Laboratories in Oregon, and Encore and Pharmalabs SD in California, for the issuance of misleading certificates of analysis about five specific products. These laboratories are accused of intentionally producing spurious test results, which were then promulgated extensively across the digital domain for product promotion and marketing, an action that is classified within the legal documents as constituting wire fraud.

Thus, this litigation not only casts a spotlight on the ethical conduct (or the alleged lack thereof) of the defendants but also unveils a labyrinthine network of purported deceit that spans several states, involving an elaborate orchestration of activities. Should these allegations be substantiated, they portend significant ramifications for the cannabis sector at large, as well as for the regulatory frameworks governing such enterprises.

STIIIZY Responds to Class Action Lawsuit Allegations

Within the analytical exposition presented by the esteemed Green Market Report, a spokesperson for STIIIZY articulated through an electronic missive that the legal allegations directed towards the enterprise are notably lacking in substantive evidence to underpin the broad and unfounded assertions made therein. This spokesperson, with a tone of unwavering conviction, declared that the lawsuit is fundamentally flawed in its premise, devoid of any credible merit, and thus, STIIIZY is committed to not merely challenging these allegations with a robust and vigorous defense but is also adamant about seeking the dismissal of this lawsuit on the basis that it is fundamentally baseless and without any credible factual foundation. At the moment when this narrative was disseminated, representatives from Cookies along with the other entities implicated in this legal matter had not yet come forward to provide any form of public rejoinder or official statement in response to these developments.

The legal action in question is vying for formal acknowledgment as a class action suit, a status that demands the sanction of federal judicial authority. Situated within the legal framework of RICO (Racketeer Influenced and Corrupt Organizations Act) litigation, there exists a provision that posits plaintiffs may be entitled to receive compensatory damages that are threefold the initially cited amount. This particular lawsuit is explicitly seeking compensatory redress amounting to $50 million, invoking the legal concept of “treble” damages. This denotes that, in the event of a favorable outcome for the plaintiffs, the financial restitution awarded could potentially magnify to an exorbitant sum of $150 million.

This judicial pursuit mirrors a precedent established by a congruent lawsuit that was filed in the state of California in the preceding summer months. The case in question saw the state of California arrayed against a consortium of nine cannabis enterprises with operational bases spanning across an eclectic mix of states, including but not limited to California, Massachusetts, Nevada, New Mexico, Oregon, Vermont, and Wyoming. The central thesis of this antecedent lawsuit centered on the argument that products containing delta-9 THC should be affixed with Proposition 65 warning labels, premised on the substantiated concerns regarding potential adverse effects on the developing fetus.

Rob Bonta, serving in the capacity of the Attorney General of California, elucidated the critical necessity to address and mitigate the risks inherent in the circulation of illicit hemp products. With a firm stance, Bonta articulated a policy of zero tolerance towards the distribution of industrial hemp commodities that fail to align with the regulatory statutes of California, as well as the illicit marketing of inhalable hemp products within the territorial confines of the state. He emphasized the imperative to ensure comprehensive communication of the potential hazards associated with these products to the consumer base before their commercial sale, alongside an unequivocal directive for the cessation of all sales of inhalable industrial hemp products. In reinforcing the commitment of the California Department of Justice, Bonta made it unequivocally clear that the commerce in illegal inhalable hemp products is unequivocally unacceptable within the state’s jurisdiction.

The genesis of the surge in hemp-derived cannabis products can be traced to the legislative enactment known as the 2018 Farm Bill, which facilitated the legalization and commercial circulation of hemp-based substances, with a particular emphasis on cannabidiol (CBD). In the wake of this legislative landmark, an array of state legislators have embarked upon the endeavor to introduce and enact regulatory measures to oversee the distribution and consumption of such products. A noteworthy legislative initiative in this continuum was observed in Missouri, where Senator Nick Schroer introduced Senate Bill 984, designated as the “Intoxicating Cannabinoid Control Act.” This legislative proposition aims to reclassify delta-8 THC products, advocating for their recognition as cannabis substances as opposed to hemp. The latest procedural advancement for SB-984 was the convening of a hearing by the Senate Judiciary and Civil and Criminal Jurisprudence Committee on the twelfth day of February.