The federal illegality of marijuana has now been used by an Ohio magistrate judge as reason enough to dismiss a breach of contract lawsuit involving the proposed sale of a licensed cannabis company. However, the judge also noted that there were specific provisions that limit how the decision could apply in other cases.
U.S. Magistrate Judge Kimberly A. Jolson in an order on Tuesday sided with J&J&D Holdings LLC over a proposed $5 million cannabis company sale by CCH Acquisitions LLC after the deal fell apart. Jolson ruled that J&J&D wasn’t liable for breach of contract precisely because marijuana prohibition undercuts the legal validity of any such contract, Law360 reported.
Jolson noted that some other courts have enforced contracts between state-legal marijuana business interests, but that the particulars of this deal made it an outlier, Law360 reported. Specifically, the deal called for J&J&D to buy $500,000 worth of marijuana plants from CCH and also mandated that J&J&D get a cultivation permit from the state of Ohio.
Both requirements violate the federal Controlled Substances Act, Jolson ruled.
“As it stands, the purchase agreement plainly violates federal law,” she wrote.
Jolson also wrote that it would be impossible to calculate potential damages under the fallout from the deal, also due to federal marijuana prohibition, since that precludes any reliable or legal valuation by the court, Law360 reported.
The deal in question mandated the acquisition of a cultivation license and the purchase of plants. Read More
