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Ohio’s attorney general alleges anticompetitive practices in a lawsuit against big cannabis operators

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ATHENS, Ohio (WOUB) — Ohio’s attorney general has filed an antitrust lawsuit accusing nine multistate cannabis operators of anticompetitive practices that disadvantage smaller operators.

The lawsuit stems from a tip submitted to the attorney general’s office by an Ohio cannabis industry employee that alleged widespread “shelf-space allotments” among large, vertically integrated cannabis companies operating in Ohio and nationwide.

Marijuana packaged for sale. [NPR]
According to the tip and later corroborated in an investigation, multistate cannabis operators entered into reciprocal purchasing agreements — negotiated at a national level — to prioritize one another’s products in Ohio dispensaries while reducing or eliminating purchases from independent Ohio cultivators and processors.

“Our investigation uncovered allegations of an industry-wide scheme designed to push small Ohio businesses out of the market,” Attorney General Dave Yost said in a news release. “Ohio’s antitrust laws protect competition and consumers, not backroom deals that rig the system for a select few.”

According to the tip, senior representatives from major multistate operators met in late 2022 and agreed to reduce purchases from independent businesses in order to preserve shelf space for one another during a period of increased supply and declining prices.

The tip further alleged that some companies established explicit internal quotas, reserving a substantial percentage of dispensary shelf space for products sourced through reciprocal agreements with other multistate operators.

The defendants named in the lawsuit are Ascend Wellness, Ayr Wellness, The Cannabist Company, Cresco Labs, Curaleaf, Green Thumb Industries, Jushi, Trulieve and Verano.

The lawsuit alleges each defendant violated Ohio’s Valentine Act by entering into reciprocal trade agreements with competitors, sharing competitively sensitive information, and engaging in discriminatory distribution practices that disadvantaged independent Ohio cannabis operators.

According to the lawsuit, these actions reduced product choice and quality for Ohio consumers, stifled innovation, and allowed the defendants to maintain or increase supra-competitive prices in the state’s cannabis market.

The lawsuit is seeking injunctive relief to halt the alleged unlawful conduct.