California jury awards cannabis company millions in antitrust case

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A California jury last week handed down what would be the first verdict of an antitrust jury involving the cannabis industry. As the cannabis industry continues to grow and evolve, antitrust litigation related to cannabis may well increase.

The case, Richmond Compassionate Collective vs. Koziol, et al., Case No. MSC16-01426 (California Superior Court for Contra Costa County), involved a dispute between medical marijuana collectives in Richmond, California. The plaintiff Richmond Compassionate Care Collective (“RCCC”) alleged that the defendants, the directors of the Richmond Patient’s Group (“RPG”), conspired to prevent the plaintiff from opening a dispensary by blocking the plaintiff’s access to the clinic. ‘Limited inventory of commercial properties where medical marijuana dispensaries were permitted to operate under a local ordinance. Specifically, RCCC argued that the defendants devised a plan in which they presented bogus leases, letters of intent to lease or purchase and purchase contracts to owners with available commercial properties for the purpose of ” bind [the landlords] with paper ”to prevent RCCC from securing a property before its pending permit expires. The defendants also went door-to-door to owners in an attempt to convince owners not to rent or lease their properties to RCCC, and also demanded non-compete clauses in their own commercial leases to contractually prevent owners to rent or lease their properties to RCCC. .

The RCCC lawsuit alleged that the defendants’ plan constituted an illegal group boycott in violation of California Cartwright Law, causing RCCC to suffer millions of dollars in damages. The case was tried in August 2021 against three RPG owners and directors: William Koziol, Darrin Parle and Alexis Parle. On September 23, 2021, the jury returned a verdict against William Koziol and Darrin Parle, awarding $ 5,000,000 in damages, which will automatically be tripled to $ 15,000,000. The remaining defendant, Alexis Parle, was declared not responsible.

In the still fragmented cannabis industry, which is experiencing significant growth and consolidation, participants should be aware of federal and state antitrust laws governing competition. In particular, cannabis companies should exercise caution and consult an antitrust lawyer before interacting with competitors, and also before taking any action that could have the effect of preventing a competitor from entering the market or to develop oneself.

Copyright © 2021, Sheppard Mullin Richter & Hampton LLP.Revue nationale de droit, volume XI, number 278


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