Great Lakes Wire

Curaleaf is facing significant financial and legal challenges due to a court case with Hello Farms, a cannabis grower based in Michigan. Patrick Lannen from Stinar Gould Grieco & Hensley highlighted these issues in a letter to analysts following Curaleaf (TSX: CURA) (OTCQX: CURLF). The federal jury ruled against two subsidiaries of Curaleaf, awarding Hello Farms $31.8 million in February 2025, with an additional $5 million in interest added by May 2025. This amount continues to increase daily.

Lannen noted that Curaleaf's financial disclosures suggest that if they lose their appeal, the financial impact could be greater than anticipated. He remarked, "Curaleaf’s disclosures admit that if they do not succeed on appeal, the resulting loss in the Hello Farms case could materially exceed their estimated accrual." Despite recently securing a $100 million credit facility, it appears this might be needed to cover the judgment.

The dispute originated from a contract between Curaleaf's Michigan subsidiaries and Hello Farms for two years of cannabis harvests. When marijuana prices dropped, Curaleaf attempted to renegotiate terms and subsequently breached the contract. Lannen criticized Curaleaf's legal approach, stating that they plan to challenge the ruling but have not disclosed specific grounds for their appeal. He added, "Incredibly, their main argument is that the contract must not be enforced because marijuana is illegal at the U.S. federal level."

The judge dismissed this defense as disingenuous and labeled it as "hypocrisy and illegal gamesmanship." Lannen expressed concern over Curaleaf's stance, saying it poses risks for anyone associated with them: "Curaleaf’s insistence that the court cannot enforce the contract because marijuana is illegal under federal law is deeply troubling for any entity–be it a business, employee, or investor—working with Curaleaf."

Hello Farms remains confident in its position. Lannen concluded by saying, "We are pleased that the jury saw the facts, as did the judge," emphasizing Hello Farms' commitment to pursuing a satisfactory resolution.

For more details on this case visit hellofarmslegal.com.

Hello Farms was founded in 2020 and operates on 80 acres of farmland in Omer, Michigan. They focus on producing high-quality sun-grown cannabis using sustainable practices.

Information from this article can be found here.