Hello Farms did everything right. It signed a contract, grew the crop it promised, passed every testing requirement, and won its case in front of a jury. Then a federal appeals court told the Michigan grower that none of it mattered, because the very industry Curaleaf built its business on made the underlying agreement unenforceable in federal court.
It’s a frustrating outcome for growers watching a multi-state operator use federal cannabis law, the same law MSOs spend millions lobbying to change, as a shield against paying its own bills.
What Was the Deal Between Hello Farms and Curaleaf?
In November 2020, Hello Farms Licensing MI signed an output contract with GR Vending MI and CURA MI, both subsidiaries of Curaleaf Holdings. GR Vending agreed to purchase the grower’s entire 2020 and 2021 marijuana harvests, and CURA MI guaranteed the deal. GR Vending also paid a $2.2 million deposit and expected to receive between 12,000 and 15,000 pounds of cannabis from the 2020 harvest alone.
Hello Farms held up its end. The farm produced roughly 16,300 pounds in 2020, and every batch passed the contract’s strict testing requirements for THC potency and contaminants. GR Vending accepted the first shipment of about 2,000 pounds. Then the wheels came off.
Why Did Curaleaf Walk Away From the Contract?
By January 2021, wholesale marijuana prices were falling fast across Michigan’s market. Instead of honoring its commitment, GR Vending stopped accepting deliveries from Hello Farms altogether.
Left holding thousands of pounds of cannabis it had already grown for a buyer that no longer wanted it, Hello Farms had to sell the rest of its 2020 crop to another buyer at reduced prices. The farm didn’t stop there. For 2021, it expanded its cultivation footprint from 7 to 25 acres, picked up recreational growing licenses, and produced about 37,500 additional pounds. It sold all of that to the same third party, again at prices lower than what Curaleaf had promised to pay.
That’s a grower absorbing real financial damage because a much larger company decided a signed contract no longer served its interests once the market shifted.
Hello Farms Took Curaleaf to Court and Won
Hello Farms sued for breach of contract in February 2021. Curaleaf’s subsidiaries moved the case into federal court and raised a defense that would eventually define the entire dispute: the argument that marijuana’s federal illegality made the contract unenforceable from the start.
The district court wasn’t swayed. It rejected the illegality defense at summary judgment, and the case went to trial. In February 2025, a jury sided with Hello Farms and awarded $31.8 million in damages. Interest continued to accrue afterward, with the total liability reportedly climbing past $38 million by later in the year.
According to the site tracking the litigation, the trial judge didn’t hold back when describing Curaleaf’s defense, calling it “hypocrisy and illegal gamesmanship.” It’s hard to argue otherwise. A company whose entire business model depends on cultivating, distributing, and selling marijuana turned around and told a federal court that marijuana contracts shouldn’t be enforceable.
How Did Curaleaf Try to Avoid Paying?
Winning the jury verdict didn’t mean Hello Farms actually collected anything. Curaleaf’s subsidiaries filed post-trial motions arguing the contract was illegal and asked the court to throw out the jury’s decision entirely.
Hello Farms pushed back hard in its own filings, accusing Curaleaf of transferring assets before the verdict was even reached, a move the farm argued was designed to make any eventual judgment harder to collect.
Whether or not those transfers were timed deliberately, the pattern is familiar to anyone who has watched large operators face financial judgments in this industry. Fight the verdict, delay payment, and lean on legal arguments the company would never want applied against its own customers.
What Did the Sixth Circuit Actually Rule?
On September 10, 2026, the Sixth Circuit reversed the jury verdict outright. Writing for the panel, Judge John Nalbandian applied a long-standing rule: federal courts won’t enforce agreements that require someone to commit a federal crime. Because the Controlled Substances Act still classifies marijuana as illegal to grow, possess, and distribute, the court found that enforcing Hello Farms’ contract would mean enforcing conduct Congress has criminalized.
The court also determined the deal wasn’t limited to medical marijuana, since the contract required Hello Farms’ product to pass recreational testing standards and GR Vending held both medical and recreational licenses. That detail mattered, because it meant a narrower federal policy protecting medical marijuana couldn’t rescue the agreement.
Perhaps most damaging for Hello Farms, the court rejected the idea that awarding money damages is somehow different from ordering illegal performance. The panel reasoned that a damages award measured by an illegal bargain is just as unenforceable as a court order compelling someone to grow or sell marijuana. In the court’s own words, “federal courts can’t enforce contract claims founded on an agreement to purchase marijuana illegally.”
Does Marijuana Rescheduling Change Anything for Farmers?
Not for Hello Farms. In April 2026, the Department of Justice (DOJ) finalized a rule moving state-licensed medical marijuana to Schedule III. Hello Farms pointed to that change as reason enough to enforce its contract. The Sixth Circuit disagreed, for two reasons.
First, a contract that was illegal when signed doesn’t become valid just because the law changes years later. The 2020 agreement was evaluated under the law as it existed at the time, not under a rule issued in 2026.
Second, rescheduling doesn’t automatically make these transactions federally legal anyway. State-licensed medical marijuana businesses still need DEA registration and FDA approval before their products can move lawfully through interstate commerce. Without that registration, even a purely medical contract signed today would run into the same wall Hello Farms hit.
So the reform that cannabis advocates spent years pushing for didn’t retroactively help a farmer who was already owed money by a company with far more resources and far more lawyers.
What Does This Mean for Cannabis Growers Going Forward?
The ruling isn’t limited to Michigan. While it’s only binding within the Sixth Circuit (Michigan, Ohio, Kentucky, and Tennessee), the reasoning draws heavily on Supreme Court precedent that applies nationwide. That should concern growers, processors, and small operators everywhere who rely on standard purchase agreements with larger, better-capitalized companies.
Attorneys tracking the case put it bluntly: the decision “slams the door on the common loophole that awarding money damages is lawful” in cannabis disputes, according to Vicente LLP partners Charles Alovisetti and Jeremy Shaw, speaking to mg Magazine. That closes off a strategy many smaller operators assumed would protect them, the idea that even if a court won’t force specific performance of a cannabis deal, it would at least award financial compensation for a breach.
The imbalance this creates is hard to ignore. A large multi-state operator with lawyers, lobbyists, and diversified revenue streams can walk away from a contract when prices dip, then invoke federal illegality to avoid paying for the damage it caused. A farmer without those resources is left covering the loss.
Where Does This Leave Farms Like Hello Farms?
Hello Farms proved its case to a jury. It followed every testing requirement, produced the crop it promised, and absorbed real financial losses when a much larger company decided the deal no longer worked in its favor. None of that translated into an enforceable judgment.
This case sends a clear warning to growers negotiating supply agreements with multi-state operators: federal law can still target the smaller party, even when that party did nothing wrong. Until Congress moves beyond scheduling changes and actually addresses marijuana’s status under the Controlled Substances Act, farmers entering these contracts are taking on legal risk that companies like Curaleaf can exploit if a deal turns sour on their end.
Frequently Asked Questions
The Sixth Circuit Court of Appeals overturned a jury’s damages award, ruling that federal courts cannot enforce contracts involving marijuana-related activity, as it remains illegal under the Controlled Substances Act.
The court ruled that the 2026 rescheduling rule could not be applied retroactively to validate a 2020 contract. It also noted that Schedule III status still requires DEA registration and FDA approval, so similar contracts today may face the same legal issues.
A Michigan jury ordered Curaleaf subsidiaries GR Vending MI and CURA MI to pay Hello Farms $31.8 million in damages after finding them liable for breach of contract. The lawsuit stemmed from GR Vending’s decision to stop accepting cannabis deliveries in 2021 following a drop in marijuana prices.
A recent ruling suggests that federal courts in the Sixth Circuit may not enforce contracts related to cannabis cultivation, distribution, or sale. To reduce this risk, legal experts advise cannabis businesses to include state-court venue clauses or arbitration provisions in their contracts.
The Sixth Circuit’s decision is only binding within those four states. However, it relies on longstanding Supreme Court precedent regarding federal illegality, so similar arguments could still surface in cannabis contract disputes in other federal circuits.
