Last week, Vireo Health of Minnesota, LLC – one of two holders of medical cannabis licenses in Minnesota – brought a lawsuit in Hennepin County against state officers and agencies in response to the recent amendments to Minnesota’s hemp law, which allows the sale of certain hemp-derived THC edibles and drinks. This article provides an explanation of Vireo’s complaint, what it wants, and what is next.
In sum, Vireo complains it is being discriminated against because it cannot sell its medical grade cannabis-derived edibles to customers outside of the medical program. It claims their medical cannabis-derived edibles are chemically identical to hemp-derived edibles, but, as a medical cannabis company, it must abide by stricter oversight, testing, and reporting than retailers who sell hemp-derived edibles. Vireo argues it is being discriminated against, because consumers now have more options to buy THC edibles without being the medical cannabis program. Here is Vireo’s complaint,
Customers of hemp-derived edibles could include patients who would otherwise buy medical cannabis from Vireo, if it were more widely and easily assessable. Customers of hemp-derived edibles will also include non-patients to whom Vireo is not allowed to sell any [medical cannabis-derived] products.
Interestingly, Vireo does not argue it is prevented from manufacturing and selling their own hemp-derived edibles. Instead, it does not want to do so. “…Vireo is not in the business of manufacturing or selling hemp-derived edibles.” Rather, Vireo argues its constitutional rights are being violated, because there is no rational basis for not allowing it to sell medical cannabis-derived edibles (ignoring the fact that selling such products would be selling illegal marijuana in violation of state and federal law). Vireo reveals it requested a variance from the Office of Medical Cannabis to allow it to sell medical cannabis-derived edibles to individuals not in the medical cannabis program but was denied.
So, what does Vireo want? Vireo is not suing for monetary damages but rather is seeking a declaratory judgment from the court. A declaratory judgment does not order a party to take an action or award monetary judgment; rather, it defines the rights of parties in regard to a certain dispute. In this case, Vireo wants a declaratory judgment from the court allowing it to sell and distribute medical cannabis-derived edibles to the same extent hemp-derived edibles are allowed. It also wants an order from the court preventing the Office of Medical Cannabis or other state agencies from taking any prosecutorial action against it or revoking its medical cannabis licenses for selling such medical cannabis-derived edibles.
Vireo’s lawsuit is silent as to how hemp-derived edibles are treated legally different than the medical cannabis-derived edibles Vireo currently manufactures and sells. Limiting the sale of products to hemp-derived cannabinoids is how the state’s hemp law stays compliant with state and federal controlled substances laws. To grant Vireo what it requests, the court would have to issue an order allowing it to sell products derived from marijuana in violation of state and federal controlled substance law – in essence allow recreational marijuana to be sold.
What’s next for this case? The life cycle for a case requesting declaratory relief is typically short because the parties do not dispute the facts of the complaint, but rather how the law is applied to those facts. The dispute is not resolved in front of a jury after a trial, but instead in front of a judge after a hearing. In Vireo’s request for relief in its Complaint, it asks for a temporary and then permanent injunction preventing state agencies from acting against it for selling medical cannabis-derived edibles. A court hearing will eventually be scheduled on the issue on whether Vireo is being improperly discriminated against by preventing it from selling medical cannabis-derived edibles. But to do so, the court must be convinced there is no question of fact, meaning the parties agree to the facts laid out in Vireo’s complaint. To get to that point, the state defendants have to admit hemp-derived THC is identical to medical cannabis-derived THC, (i.e. marijuana-derived THC). Doing so could open significant legal and policy issues relating to Minnesota’s hemp law and recreational cannabis, so it is questionable whether the state defendants will agree to the facts as presented by Vireo.
What does this mean for Minnesota’s hemp industry? Vireo is not challenging the hemp law or trying to invalidate it. Rather, it wants to sell medical cannabis-derived edibles in the same manner as hemp-derived edibles. If Vireo is successful, it would result in medical grade cannabis being sold for recreational purposes. Minnesota may be forced to allow recreational cannabis before its ready to do so.
Vireo has enjoyed the benefits of being one of just two medical cannabis licenses in Minnesota. The medical cannabis program, however, has faced a lot of criticism as of late due to the high program fee and cost of product, which often comes with the lack of competition. Some Minnesotans have benefited and welcomed the expanded choices that came with the amended hemp law, and now Vireo is suing to allow it to compete in a marketplace that is no longer limited to just two companies.
Carol Moss is a partner with Hellmuth & Johnson, a law firm located in Edina, Minnesota. Carol has a passion for advising and guiding her clients as they grow and navigate challenges, especially in the legal cannabis industry, allowing them to focus on creating and continuing successful businesses. She represents cannabusiness clients at different points in the product stream – from grower to retailer. Her focus on her entrepreneur clients led her to become a board member of the National Association of Women Business Owners – Minnesota. Working with a full-service law firm, Carol supports her clients with whatever situation may come their way.
If you have questions regarding your cannabis business, please do not hesitate to contact Carol Moss at (952) 746-2187 or cmoss@hjlawfirm.com.
