September 18, 2026
On September 10, the U.S. Court of Appeals for the Sixth Circuit reversed a $31.8 million jury verdict that Michigan grower Hello Farms had won against two Curaleaf subsidiaries for abandoning a 2020 supply deal. The panel did not decide that GR Vending honored the contract. It decided that a federal court cannot make anyone pay for marijuana. "On the face of the contract, the parties promised to commit felonies," Judge John Nalbandian wrote, and federal courts "leave the parties as we find them."
The opinion came one day after the D.C. Circuit refused to stay the April rescheduling order, and it answers a question many vendors assumed Schedule III had settled. Cannabis contract enforceability in federal court is not better than it was in 2020. In four states, it is now worse.
In November 2020, GR Vending MI and CURA MI agreed to buy Hello Farms' entire 2020 and 2021 harvests. The contract expected 12,000 to 15,000 pounds from the first crop and came with a $2.2 million deposit. Hello Farms grew about 16,300 pounds, all of it passed testing, and GR Vending accepted the first shipment of roughly 2,000 pounds.
By January 2021, Michigan wholesale prices were in freefall. GR Vending stopped taking deliveries. Hello Farms sold the rest of the crop to a third party at lower prices, expanded from 7 to 25 acres for 2021, and sued.
It sued in Michigan state court. The Curaleaf subsidiaries removed the case to federal court in Bay City on diversity grounds, then raised federal illegality as a defense. District Judge Matthew Leitman called it a close call, let the case go to trial, and a jury awarded $31,848,279. Prejudgment interest brought the judgment to roughly $37.3 million.
Three moves in the opinion matter to anyone with a contract that touches a dispensary.
Medical versus adult-use did not save it. Hello Farms held only medical cultivation licenses and argued the deal was a medical contract shielded by the Rohrabacher-Farr appropriations rider. The panel said GR Vending held both medical and adult-use licenses, Michigan lets product move between the two inventories, and the contract itself specified adult-use testing standards. Even if the deal had been purely medical, the rider only stops the Justice Department from spending money on prosecutions. "Congress knows how to legalize conduct, but it chose a different route with the RFA."
A damages award counts as enforcement. Hello Farms argued it was asking for money, not for a court to order a marijuana delivery. The court rejected the distinction. GR Vending owed payment only if Hello Farms delivered marijuana, so a judgment for the payment enforces the same illegal exchange. The opinion cites district courts in New York, Ohio, Oklahoma, Oregon, and Washington that have refused to enforce investment agreements, business purchase agreements, seed and services contracts, and equity grants on the same reasoning.
Schedule III did not reach back. The April 28 rule moved state-licensed medical marijuana to Schedule III while this appeal was pending. The panel held that a contract illegal when made is not revived by a later change in law. Then it went further. Under the new rule, a business must register with the DEA to lawfully grow or distribute medical marijuana, so the same contract signed today without a DEA registration would still violate federal law.
Judge Whitney Hermandorfer joined everything except the section classifying the contract as adult-use. The panel sent the case back with instructions to enter judgment for the defendants. The Curaleaf subsidiaries said they were "pleased with the outcome" and "continue to support cannabis reform."
The Sixth Circuit covers Michigan, Ohio, Kentucky, and Tennessee. That is one of the largest adult-use markets in the country, the newest large one, and a medical program that only recently opened its first stores. Federal courthouse doors in those four states are now closed to any claim that requires a court to enforce the sale of marijuana, and the opinion's list of cited cases suggests contracts one step removed from the plant are not safe either.
The procedural detail is the one to remember. Hello Farms filed in state court and ended up in federal court because its counterparty was based somewhere else. Any vendor suing an out-of-state operator faces the same removal, and once the case is in federal court, the illegality defense is now settled circuit law. Whitt Steineker of Bradley Arant, writing on the decision, listed state-court forum-selection clauses and arbitration provisions as the practical response.
The rescheduling side of the ledger did not move. The D.C. Circuit's September 9 order said petitioners "have not satisfied the stringent requirements for a stay", so state-licensed medical product stays in Schedule III while the merits are briefed. The parties have 30 days to propose a briefing format. A win for the order in that court still leaves adult-use product in Schedule I and every unregistered medical operator outside the rule.
Credit terms are the first thing that changes. A supplier extending 60-day terms to a Michigan or Ohio retailer is relying on a contract that a federal court has just said it will not touch. Expect more deposits, shorter terms, and more collateral, which is roughly what the GR Vending deal had before the market fell out.
Counterparty diligence changes too. Whether a dispensary's license is medical or adult-use, and whether the operator has a DEA registration, is now a question about which court can hear a dispute and whether any court will enforce the deal. The owner on the license is the person who has that answer.
None of this is legal advice. A vendor with open contracts in the Sixth Circuit should have counsel look at forum clauses and dispute provisions before the next renewal.
Are cannabis contracts enforceable in federal court? In the Sixth Circuit, no, where performing the contract requires growing, distributing, or possessing marijuana. The court held a damages award enforces the illegal bargain just as an order for delivery would.
Did rescheduling make cannabis contracts enforceable? No. The panel said a contract illegal when made stays illegal, and that even a new medical contract needs a DEA registration on both sides to be lawful under the April rule.
Can a dispute still be heard in state court? The opinion addresses only federal courts. Hello Farms started in Michigan state court and was removed on diversity grounds, which is why forum-selection and arbitration clauses are the response lawyers are recommending.
What happened with the rescheduling challenge? On September 9, the D.C. Circuit denied a stay, so the April order stays in effect during the appeal. The underlying challenges continue.
A contract with a dispensary is only as good as the license behind it and the court that will hear it. See verified, owner-level dispensary contacts for Michigan and five other states, refreshed weekly. Free preview at holdenleads.com.
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