Missouri Cannabis Cultivators File Class Action Against Good Day Farm
Alleged Cartel Owns or Controls 3X the Number of Dispensaries Permitted Under Constitution
Uses Market Power to Crush Wholesale Prices
GDF and its co-conspirators allegedly built the Cartel by arranging for third parties to invest in limited liability companies (LLCs) that then acquire additional dispensary, cultivation, and processing facilities, all of which are owned, managed, or controlled by GDF. The result: the alleged Cartel currently exercises effective control over at least 61 dispensaries—nearly triple the 22 permitted under the Missouri Constitution's requirement that no more than 10% of dispensary licenses be under "substantially common control, ownership or management." With 224 dispensaries currently licensed statewide, the alleged GDF Cartel controls more than one in four dispensary licenses in
To circumvent the 10% licensing cap in the Missouri Constitution and evade regulatory oversight, the alleged Cartel operates under five different brand names:
- Good Day Farm (21 dispensaries),
- CODES (20 dispensaries),
- Greenlight (10 dispensaries),
- Fresh Karma (6 dispensaries), and
- 3Fifteen Primo (4 dispensaries).
But they are all part of a single coordinated operation that the complaint alleges consistently colludes to:
- Purchase cannabis products from non-Cartel wholesalers at artificially depressed prices;
- Stock their 61 dispensaries with substantially the same products—primarily those produced by the Cartel's cultivators—to the substantial exclusion of products from independent wholesalers;
- Compel independent wholesalers who also operate dispensaries to purchase the Cartel's finished products as a condition of getting their own wholesale products onto the Cartel's dispensary shelves; and
- Boycott non-Cartel wholesalers that refuse to agree to the Cartel's anticompetitive demands.
The complaint alleges the financial toll the Cartel has inflicted: since the Cartel began its illicit price fixing, it has used its collective market power to depress wholesale prices by more than 20%, and it continues to squeeze wholesalers and threaten the viability of their operations.
The antitrust complaint alleges that GDF knew that its cartel-building scheme could pose legal risks to the company under the Constitution's 10% licensing cap. The complaint quotes from a document GDF provided to potential investors that states: "Assurances cannot be made that the Missouri Department of Cannabis Regulation will not take issue with the number of marijuana dispensaries operated or supervised by the Manager or its affiliates…"
This action is brought on behalf of a putative class that includes all independent
For more information, visit www.MOCannabisClass.org
For media inquiries, email: [email protected]
View original content:https://www.prnewswire.com/news-releases/missouri-cannabis-cultivators-file-class-action-against-good-day-farm-302756251.html
SOURCE Feuerstein Kulick LLP and Bryan Cave Leighton Paisner LLP
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