4 Arkansas marijuana companies hit with RICO suit over alleged THC inflation

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Four medical marijuana companies in Arkansas are in the crosshairs of a federal civil lawsuit alleging that they conspired to defraud MMJ patients by illegally lying about cannabis potency testing results.

The class action lawsuit – filed July 12 by three Arkansas MMJ patients – alleges that a prominent state cannabis testing lab “intentionally inflates the amount of THC in its customer’s flower” on behalf of at least three growers also named as defendants.

The suit was filed against testing lab Steep Hill Arkansas and growers Bold Team, Natural State Medicinals and Osage Creek Cultivation.

“The net effect is to defraud the Plaintiff and putative clause by over-representing the amount of THC in flower to the detriment of the Plaintiff and Class so that Steep Hill, the cultivators, and the dispensaries can make more money,” the suit alleges.

A representative for Osage Creek told MJBizDaily that the company declined to comment on pending litigation.

The other three defendants could not be reached for comment.

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The suit was filed under a federal anti-racketeering statute, the Racketeer Influenced and Corrupt Organizations (RICO) Act, which allows for treble damages in civil cases.

RICO cases have been used against cannabis companies for years, with varying degrees of success, because the marijuana industry remains federally illegal.

John Schroyer can be reached at john.schroyer@mjbizdaily.com.