A new class action lawsuit argues that cannabis store Good Day Farm owns, controls or manages an illegally high share of Missouri's dispensary licenses and uses its market power to manipulate the state's $1.52 billion cannabis market.
Missouri-licensed cannabis cultivators and manufacturers CPC of Missouri-Smithville and GF Saint Mary filed the complaint in the Circuit Court of Jackson County on behalf of independent wholesalers. It alleged that GDF and co-conspirators built the "cartel" by arranging for third parties to invest in LLCs that then acquire additional dispensary, cultivation and processing facilities, all of which are owned, managed or controlled by GDF.
The complaint added that 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 plaintiffs argued that GDF controls more than one in four dispensary licenses in Missouri and accounts for upwards of 40% of wholesale cannabis purchased in the state.
The alleged cartel reportedly operates under five different brand names:
- Good Day Farm (21 dispensaries)
- CODES (20 dispensaries)
- Greenlight (10 dispensaries)
- Fresh Karma (6 dispensaries)
- 3Fifteen Primo (4 dispensaries)
However, the lawsuit claimed they are all part of a single coordinated operation that 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
- Boycott non-cartel wholesalers that refuse to agree to the cartel's anticompetitive demands
"Missouri's cultivators and manufacturers have been suffering under this scheme for too long," attorney Bob Hoffman said. "Many of them know something is wrong but don't realize the scope of the cartel's market manipulation."
The complaint alleged the cartel used its collective market power to depress wholesale prices by more than 20%. It also quoted a document GDF provided to potential investors that stated, "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."
