More Cannabis Companies Targeted By Class-Action Suits

A growing number of cannabis businesses are being sued for violating the Federal Telephone Consumer Protection Act (TPCA) according to an investigation by Marijuana Business Daily. The report found at least 12 class-action lawsuits from around the country that alleged cannabis businesses spammed customers with deals and sales, starting in May 2018.

“These cases are often low-hanging fruit for litigious attorneys,” said Michael Sampson, a Pittsburg-based attorney, in the report. “Businesses should triple-check their marketing approaches.” Sampson also said such settlements can sometimes reach six figures and could bankrupt a fledgling cannabis business.

California-based attorney Mark Roth also warned cannabis companies to be careful.

“It’s the new ambulance chasing. If you don’t agree to pay a would-be plaintiff’s demand — which could be substantial — on the grounds that you had their consent to send them the text message at issue, they can still sue you anyway and you would be forced to defend the matter, which will cost more than the initial demand amount.“ — Roth, in an interview with MJBizDaily

Roth said that to avoid a potential lawsuit, it’s important to get written consent before businesses send any marketing materials to customers.

“Consent, consent, consent. Kind of like location, location, location,” he said. “That’s the holy grail, if you will, of protecting yourself from liability. If you have consumer consent … you’re fine. You’re bulletproof.”

The cannabis delivery service Eaze solutions was one of the first cannabis companies sued for “unsolicited” text messages in 2018, according to the report. A San Diego resident sued for $2000 per unsolicited text, but the case was later dismissed and sent to private arbitration. Some of the other cases uncovered by the investigation ranged from cultivation supply companies to dispensaries/retail stores in Colorado, California, and Washington.

A report in April by the global law firm Goodwin found that class-action suits against cannabis companies rose 116% from the years 2018-2019.