Hey, I’m Morgan Davis, a business attorney based in Raleigh, North Carolina, focusing on cannabis and wellness. Let’s talk about how to keep your business protected and thriving.
Overview of the New Lawsuit
A California-based company, Stiiizy, has been sued in federal court in Illinois by two plaintiffs—one from Missouri and one from Illinois—who purchased several Delta-8 products. This lawsuit is very similar to the one filed in Georgia earlier this year. The crux of both lawsuits is the allegation that Stiiizy knowingly mislabels, packages, and advertises its products as legal when they are not.
The lawsuit is a class action, potentially involving millions of plaintiffs, with an estimated claim of at least $5 million in damages. We will be tracking this lawsuit, along with the one in Georgia, to see how they proceed. Here are the key allegations and what your company can learn to protect itself from similar scenarios.
Allegation 1: Non-Compliant Products
The plaintiffs claim that Stiiizy advertises its products as compliant with the federal 0.3% Delta-9 THC limit by dry weight. However, independent testing conducted by the plaintiffs revealed that some products exceed this limit, with one product having a Delta-9 THC concentration of 3.57%.
Why This Matters:
Whether you’re a manufacturer, wholesaler, distributor, retailer, or consumer, this is crucial. The hemp industry, especially the intoxicating hemp sector, is rife with non-compliant products. Whether due to manufacturing issues, poor environmental controls by wholesalers and distributors, or degradation of products, non-compliance is a widespread issue.
Allegation 2: Violation of Food, Drug, and Cosmetic Acts
The lawsuit claims that Stiiizy’s products do not comply with federal or state Food, Drug, and Cosmetic Acts. The FDA does not currently permit hemp-derived products to be added to food and beverages or marketed as dietary supplements. While enforcement has been lax, many states have similar laws that may not exempt these products.
Why This Matters:
The lack of enforcement has led many businesses to assume they are safe. However, individual consumers are now bringing claims based on these laws. This lawsuit suggests that businesses can no longer rely on the assumption that there will be no enforcement.
Allegation 3: Consumer Deception
The final claim is that consumers would not buy these products if they knew they were over the legal THC limit. While some consumers seek out high-THC products, many rely on the legality and safety of what they purchase. If consumers believe they are buying legal products, but they are not, this could lead to significant backlash and potential legal consequences.
Why This Matters:
There is a growing trend of consumers holding companies accountable for mislabeling and false advertising. This lawsuit, along with others like it, indicates a potential shift towards increased litigation in the hemp industry. Companies must ensure that their product labeling, contents, and advertising are consistent and truthful to avoid legal repercussions.
Implications for the Hemp Industry
These lawsuits represent a possible turning point for the hemp industry, marking the beginning of a new phase of litigation. The larger and more popular a company becomes, the bigger the target it is for consumer lawsuits. Similar to the food industry, the hemp industry could become the next hotbed for litigation over product misrepresentation.
Conclusion
To protect your business, ensure that your products are compliant with all federal and state regulations. Accurate labeling and advertising are critical to avoid consumer deception. If you are concerned that your business practices could lead to legal trouble, reach out to us. We can help you navigate the complexities of the hemp industry and avoid worst-case scenarios.
Stay tuned for updates on these lawsuits and other important industry developments. If you need immediate assistance, contact us today to safeguard your business.
