Cannabis Contract Enforceability: $31.8M Verdict Erased

Cannabis contract enforceability in federal court just took a major hit. On Sept. 10, 2026, the U.S. Court of Appeals for the Sixth Circuit threw out a $31.8 million jury verdict in a Michigan cannabis supply dispute, holding that “federal courts can’t enforce contract claims founded on an agreement to purchase marijuana illegally.” The losing company has reportedly asked the court to reconsider.

What the court decided

In Hello Farms Licensing MI, LLC v. GR Vending MI, LLC, No. 25-1759, a jury had found for Hello Farms against Curaleaf subsidiaries. The Sixth Circuit reversed the trial court’s denial of judgment as a matter of law on the defendants’ illegality defense. The court acknowledged the defense is, in an old phrase it quoted, “a very dishonest one” for a party to raise, and applied it anyway.

Why Schedule III didn’t save the deal

The court addressed the April 2026 rescheduling order directly. It said the order moved FDA-approved marijuana products and state-licensed medical marijuana to Schedule III, and does not retroactively validate this agreement, which referenced recreational testing requirements. Adult-use marijuana remains a Schedule I substance under federal law. The court also said that even a medical-only version of the transaction would still require the relevant DEA registration.

The rehearing request

According to The Marijuana Herald and WeedWeek, Hello Farms has asked the Sixth Circuit for rehearing, warning of “unimaginable instability” if the decision stands. The Herald reported the judgment had grown to about $37.2 million with interest. We have not reviewed the petition, so its filing date and whether it seeks panel or full-court review are not confirmed. CLN has not independently verified the current docket or mandate status.

What cannabis contract enforceability means for your business

• The ruling concerns a marijuana purchase agreement. Other cannabis-related contracts require separate analysis of the promised performance and requested remedy.
• Schedule III status for medical marijuana does not automatically change that for adult-use deals.
• Forum and choice-of-law clauses deserve review, but a state-court filing alone does not ensure the dispute stays there: this case was removed to federal court.
• Review payment, security and escrow terms with counsel; none should be presented as a guaranteed solution to an illegality defense.

Operators reviewing existing agreements can start with Cannabis Industry Lawyer.

Related coverage

For the rescheduling background, see our Schedule III recap and our coverage of the DEA rescheduling hearing.

Original source

• U.S. Court of Appeals for the Sixth Circuit, Hello Farms Licensing MI, LLC v. GR Vending MI, LLC, No. 25-1759 (Sept. 10, 2026)

By Thomas Howard, cannabis attorney. General information, not legal advice.