Curaleaf Holdings Inc (TSE: CURA) (OTCMKTS: CURLF) will be paying a private Michigan marijuana cultivator a hefty sum following a new court ruling on Wednesday, a report from Crain Communications just explained.
Hello Farms will be receiving US$31.9 million from the major cannabis operator after it was determined that Curaleaf had breached their purchase agreement.
In a nutshell, Curaleaf agreed to buy thousands of pounds of outdoor-grown product from Hello Farms but later attempted to negotiate a lower price than originally agreed upon when the value of cannabis declined in the state substantially.
Hello Farms then filed a lawsuit over the company’s attempt to go back on the original deal due to unforeseen market circumstances. Additionally, the Michigan grower alleged that it grew alot more weed in 2021 to fulfill Curaleaf’s request, but was left with a large quantity of unsold product when Curaleaf demanded price renegotiation.
Hello Farms wouldn’t budge.
The companies had been arguing in the courtroom for about four years before the U.S. District Court ruled in favour of Hello Farms and the settlement was agreed upon. Whether or not Curaleaf will try and appeal the decision is uncertain.
The public operator had previously attempted to countersue claiming that Hello Farms was not living up its end of the deal, but that suit was dismissed in 2021.
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Michigan flower hit an all-time low last month
It sunk all the way down to US$69.20 per ounce in December after being valued at around US$71.80 in November. A bag of buds that size was worth approximately US$97.50 in late 2023. However, flower is still the number one selling product in Michigan.
The state is considered to have a significant oversupply of cannabis, which is a major factor contributing to this pricing decline.
This overabundance of reefer resulted in a 228 per cent year-over-year increase in the amount of fresh frozen bud in stock at the end of 2024. Nearly 2.8 million pounds, to be precise.
Regulators have been receiving criticism for issuing too many licenses in recent months.
To date, Michigan has raked in nearly US$10 billion from recreational sales alone.
rowan@mugglehead.com
