Hello Farms did everything right. The Michigan grower signed a contract, grew the crop it promised, passed every testing requirement, and won its case in front of a jury. Then a federal appeals court said none of it mattered, because the very industry Curaleaf built its business on made the underlying agreement unenforceable in federal court.
Let that sink in. A multi state operator that cultivates, distributes, and sells marijuana in state after state told a federal court that marijuana contracts should not be enforceable. And the court agreed. The trial judge called it “hypocrisy and illegal gamesmanship.” He was being polite.
The Deal Curaleaf Signed, Then Abandoned
In November 2020, Hello Farms Licensing MI signed an output contract with GR Vending MI and CURA MI, both Curaleaf subsidiaries. GR Vending agreed to buy the farm’s entire 2020 and 2021 harvests, put down a $2.2 million deposit, and expected 12,000 to 15,000 pounds from the 2020 harvest alone. CURA MI guaranteed the deal.
Hello Farms delivered. The farm produced roughly 16,300 pounds in 2020, and every batch passed the contract’s strict THC potency and contaminant testing. GR Vending accepted the first shipment of about 2,000 pounds.
Then wholesale marijuana prices started falling across Michigan. By January 2021, GR Vending stopped accepting deliveries altogether. The contract no longer served Curaleaf’s interests, so Curaleaf stopped honoring it.
Hello Farms was left holding thousands of pounds of cannabis it had grown for a buyer that walked away. The farm sold the rest of its 2020 crop to another buyer at reduced prices. For 2021, it expanded from 7 to 25 acres, picked up recreational growing licenses, produced about 37,500 additional pounds, and sold all of it to the same third party, again below the prices Curaleaf had promised.
That is a farmer absorbing real financial damage because a much larger company decided a signed contract was optional once the market shifted.
The Jury Said Pay. The Appeals Court Said Never Mind.
Hello Farms sued for breach of contract in February 2021. Curaleaf’s subsidiaries moved the case to federal court and raised the defense that would define the entire dispute: marijuana’s federal illegality made the contract unenforceable from the start.
The district court was not buying it. It rejected the illegality defense, the case went to trial, and in February 2025 a jury sided with Hello Farms and awarded $31.8 million in damages. With interest accruing, total liability reportedly climbed past $38 million later in the year.
Winning the verdict did not mean collecting a dollar. Curaleaf’s subsidiaries filed post trial motions asking the court to throw out the jury’s decision entirely. Hello Farms pushed back hard, accusing Curaleaf of transferring assets before the verdict was even reached, a move the farm argued was designed to make any eventual judgment harder to collect. Whether or not the timing was deliberate, the pattern is familiar: fight the verdict, delay payment, lean on legal arguments the company would never want applied against its own customers.
On September 10, 2026, the Sixth Circuit reversed the jury verdict outright. Writing for the panel, Judge John Nalbandian applied a long standing rule: federal courts will not enforce agreements that require someone to commit a federal crime. Because the Controlled Substances Act still classifies marijuana as illegal to grow, possess, and distribute, enforcing Hello Farms’ contract would mean enforcing conduct Congress has criminalized.
The court also rejected the argument that awarding money damages is somehow different from ordering illegal performance. A damages award measured by an illegal bargain, the panel reasoned, is just as unenforceable as a court order compelling someone to grow marijuana. In the court’s words, federal courts cannot enforce contract claims founded on an agreement to purchase marijuana illegally.
Rescheduling Did Not Save the Farmer
Hello Farms pointed to the April 2026 DOJ rule moving state licensed medical marijuana to Schedule III as reason to enforce the contract. The Sixth Circuit said no, twice over.
First, a contract that was illegal when signed does not become valid because the law changes years later. The 2020 agreement was judged under the law as it existed in 2020, not under a rule issued in 2026.
Second, rescheduling does not make these transactions federally legal anyway. State licensed medical marijuana businesses still need DEA registration and FDA approval before products can move lawfully through interstate commerce. Without that registration, even a purely medical contract signed today runs into the same wall.
The reform cannabis advocates spent years pushing for did not retroactively help a farmer already owed money by a company with far more resources and far more lawyers.
What This Means for Every Grower Signing an MSO Contract
The ruling is binding only in the Sixth Circuit: Michigan, Ohio, Kentucky, and Tennessee. But its reasoning leans heavily on Supreme Court precedent that applies nationwide. Growers, processors, and small operators everywhere who rely on standard purchase agreements with larger, better capitalized companies should be paying attention.
Attorneys tracking the case are blunt. Vicente LLP partners Charles Alovisetti and Jeremy Shaw told mg Magazine the decision “slams the door on the common loophole that awarding money damages is lawful” in cannabis disputes. That closes off the strategy many smaller operators assumed would protect them: the idea that even if a court will not force performance of a cannabis deal, it would at least award financial compensation for a breach.
The imbalance is impossible to ignore. A large operator with lawyers, lobbyists, and diversified revenue can walk away from a contract when prices dip, then invoke federal illegality to dodge the damage it caused. A farmer without those resources eats the loss.
So here is the practical move. Legal experts now advise cannabis businesses to include state court venue clauses or arbitration provisions in their contracts, keeping disputes out of federal court entirely. If you are a grower negotiating a supply agreement with an MSO, that clause is no longer nice to have. It is the difference between an enforceable contract and an expensive piece of paper.
Until Congress moves beyond scheduling changes and actually addresses marijuana’s status under the Controlled Substances Act, farmers signing these deals are taking on legal risk that companies like Curaleaf can exploit the moment a contract turns inconvenient. Hello Farms proved its case to a jury and still walked away with nothing. Plan accordingly.
For more on index milestones, see Trulieve and Curaleaf index inclusion in the S and P and FTSE. For another expansion story, see Verano Virginia Texas 2027 growth and Archos.
FAQs
1. 1. What did Curaleaf agree to buy from Hello Farms?
Through two subsidiaries, Curaleaf agreed to buy the Michigan farm’s entire 2020 and 2021 harvests, with a $2.2 million deposit and 12,000 to 15,000 pounds expected from 2020 alone.
2. 2. Why did Curaleaf stop taking deliveries?
Wholesale marijuana prices were falling across Michigan, so by January 2021 the buyer stopped accepting product. The contract no longer served Curaleaf, so Curaleaf walked away.
3. 3. What did the jury decide?
In February 2025 a jury sided with Hello Farms and awarded $31.8 million in damages, with total liability climbing past $38 million as interest accrued. The farm never collected a dollar.
4. 4. How did the Sixth Circuit rule?
It held the contract unenforceable in federal court because marijuana’s federal illegality tainted the agreement. A multistate operator that sells marijuana nationwide argued marijuana contracts should not be enforced, and the court agreed.
5. 5. What does this mean for cannabis contracts?
Until federal law changes, any cannabis contract can be voided in federal court by the party that wants out. The trial judge called it hypocrisy and illegal gamesmanship, and operators should plan their deals accordingly.
Source
Original reporting by Beard Bros Pharms (no named byline on the source page): Curaleaf Owed a Farmer $31.8M. Federal Law Let It Walk Away.