The Sixth Circuit Court of Appeals has ruled that a contract for the supply of marijuana between Hello Farms Licensing MI, LLC and GR Vending MI, LLC is unenforceable due to federal law. This decision, filed on September 10, 2026, affects businesses operating in the marijuana industry, particularly in states where marijuana has been legalized. The ruling emphasizes the ongoing conflict between state and federal laws regarding marijuana.
Hello Farms, a Michigan-based marijuana grower, had entered into a contract with GR Vending and CURA MI to supply marijuana. When GR Vending breached the contract, Hello Farms sued for damages. A jury awarded Hello Farms $31.8 million, but GR Vending argued that the contract was illegal under federal law, as marijuana remains a Schedule I controlled substance.
The case, identified by docket number 25-1759, began when Hello Farms and GR Vending entered into an agreement in November 2020. Under this contract, GR Vending agreed to purchase all the marijuana produced by Hello Farms during its 2020 and 2021 harvests. At the time, Hello Farms was licensed to grow medical marijuana, while GR Vending held licenses to operate as a provisioning center and retailer for both medical and recreational marijuana.
In early 2021, GR Vending refused to accept further deliveries from Hello Farms due to a significant drop in marijuana prices. This led Hello Farms to sell its remaining harvest to a third party at lower prices. Subsequently, Hello Farms sued GR Vending for breach of contract in Michigan state court, which was later moved to federal court based on diversity jurisdiction.
The district court ruled that the contract was enforceable, citing the medical marijuana provisions of the Rohrabacher-Farr Amendment (RFA) as a reason for its decision. However, GR Vending appealed, arguing that the contract was illegal under federal law and thus unenforceable.
The court ruled that the contract violated federal law, stating, "Hello Farms’s cause of action seeks to enforce its claim to lost profits from the parties’ felonious agreement." The judges noted that the contract was not limited to medical marijuana, as it included provisions for recreational cannabis testing. This meant that the agreement involved transactions that were illegal under federal law.
Judge John B. Nalbandian delivered the opinion of the court, with Judges Eugene E. Siler, Jr. and Whitney D. Hermandorfer concurring. The ruling emphasized that federal courts have a duty to refrain from enforcing contracts that violate federal law, even if state laws permit such agreements.
The impact of this ruling is significant for the marijuana industry, particularly in states like Michigan where marijuana has been legalized for medical and recreational use. Businesses in the marijuana sector may now face increased uncertainty regarding the enforceability of contracts related to marijuana transactions. The ruling reinforces the notion that federal law supersedes state law when it comes to illegal substances, and it may deter businesses from entering into contracts that involve marijuana.
This decision may also set a precedent for future cases involving marijuana contracts in federal courts. As the legal landscape surrounding marijuana continues to evolve, businesses may need to navigate the complexities of both state and federal regulations more carefully.
As for what’s next, it remains unclear if Hello Farms will seek to appeal this ruling. There are no related cases pending at this time. However, the decision highlights the ongoing legal challenges faced by the marijuana industry as it operates within a framework of conflicting state and federal laws.