Good Day Farms accused of illegal monopoly by Missouri cannabis companies
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- A Smithville business filed a lawsuit accusing Good Day Farms of creating a monopoly
- The lawsuit alleges Good Day Farms a controls at least 61 dispensaries in Missouri.
- The lawsuit accuses Good Day Farms of forcing below-market wholesale prices and boycotts.
A Kansas City-based cannabis company is suing one of the largest marijuana businesses in the state, alleging that the companies have created a monopoly and are squeezing out smaller businesses by depressing wholesale prices.
CPC of Missouri Smithville, LLC, a marijuana cultivator and manufacturer in the Kansas City suburb of Smithville, partnered with another marijuana company in Saint Mary, Missouri, to sue Good Day Farms and allegedly associated businesses. The class action lawsuit was filed in Jackson County Circuit Court on Tuesday. CPC produces marijuana products under the label Local Cannabis.
When Missouri voters approved a constitutional amendment allowing recreational marijuana use, it regulated the business structure so that no single company could hold more than 10% of dispensary licenses. The lawsuit alleges that Good Day Farms and associated businesses control at least 61 dispensaries, nearly three times as many as allowed by law.
The lawsuit says that one company operating nearly a quarter of legal dispensaries allows them to exert substantial influence over the costs offered to marijuana wholesalers.
An attorney leading the case called it a horizontal price-fixing conspiracy.
Good Day Farms has 21 dispensaries in Missouri and two in the Kansas City area. The lawsuit alleges that the same ownership group manages 20 Codes dispensaries, 10 Greenlight dispensaries, six Fresh Karma dispensaries and four 3Fifteen Primo dispensaries.
The lawsuit alleges that Good Day Farms used its large industry footprint to force wholesalers to sell below market value, compelled competing wholesalers to purchase their products to gain entry to Good Day Farms dispensaries and boycotted businesses that didn’t meet Good Day Farms’ demands.
“In short, the GDF Cartel was designed to dominate Missouri’s cannabis market and exploit Missouri’s licensing structure to suppress competition for wholesale cannabis purchases, extract anticompetitive illegal profits from the Missouri economy, and wield a collective level of market power that cannot be maintained by a single company under the Missouri Constitution,” the lawsuit alleges.
A spokesperson for Good Day Farms called the lawsuit’s claims “baseless and without merit.”
“Our company operates in full compliance with all applicable Missouri state laws and regulations, and we will vigorously defend that record,” the spokesperson said. “We will not allow aggressive legal tactics to distract us from what matters most: our mission to deliver uninterrupted service and exceptional products to the patients, customers and employees who rely on us.”
The lawsuit is asking the court to declare Good Day Farm’s business practices illegal under Missouri antitrust laws, prohibit them from doing business in their current structure and seek monetary damages.
A list of putative class members, who could sign onto the class-action lawsuit, contains 93 businesses.
