A Michigan marijuana cultivation company is asking a federal appeals court to reconsider its decision overturning a $31.8 million jury verdict, warning that the ruling could create widespread instability for businesses operating in states where marijuana is legal.
Hello Farms Licensing MI has filed a request for rehearing with the U.S. Court of Appeals for the Sixth Circuit, challenging a September 10 decision that found federal courts cannot enforce marijuana supply contracts involving conduct prohibited under federal law. The company argues that the ruling threatens to create “unimaginable instability” in states with regulated marijuana markets.
The dispute involves GR Vending MI and CURA MI, two subsidiaries of Curaleaf Holdings, which entered into an agreement in November 2020 to purchase marijuana grown by Hello Farms during its 2020 and 2021 harvests.
Under the agreement, GR Vending was expected to purchase the company’s entire production, with the 2020 harvest initially projected at between 12,000 and 15,000 pounds. Hello Farms ultimately produced approximately 16,300 pounds that year, all of which passed the required testing. GR Vending accepted an initial shipment of about 2,000 pounds but declined further deliveries as marijuana prices fell.
Hello Farms subsequently sued for breach of contract, and a federal jury awarded the company $31.8 million in damages. With prejudgment interest, the judgment grew to approximately $37.2 million.
However, a three-judge panel of the Sixth Circuit reversed the verdict September 10, concluding that federal courts cannot enforce agreements requiring the cultivation and distribution of marijuana in violation of the federal Controlled Substances Act.
The judges also rejected arguments that federal protections for state medical marijuana programs or the government’s April 2026 decision to move certain medical marijuana activities to Schedule III made the agreement enforceable.
The court concluded that the rescheduling change did not apply retroactively and that marijuana transactions conducted without required federal authorization remained illegal.
The decision carries consequences for federal contract litigation throughout the Sixth Circuit, which covers Michigan, Ohio, Kentucky and Tennessee. Although marijuana businesses can operate legally under applicable state laws, the ruling allows federal prohibition to prevent enforcement of certain contracts involving those businesses.
Following the September ruling, the Curaleaf subsidiaries told The Marijuana Herald that they were pleased with the outcome while maintaining their support for marijuana reform and legalization.
Hello Farms is now seeking to have the appellate court revisit its decision and restore its ability to recover the damages awarded by the jury.
The case is Hello Farms Licensing MI, LLC v. GR Vending MI, LLC, No. 25-1759.
