An online retailer of intoxicating hemp products was justified in canceling a distribution contract with its suppliers over moldy products and other problems with shipments, a North Carolina judge has ruled.
Buncombe County Superior Court Judge Michael L. Robinson denied a motion for a temporary restraining order and preliminary injunction sought by A Distribution Co. LLC (ADC) and Green Family Farm Int. LLC (GFF), which also accused re-seller Mood Product Group LLC of using their trade secrets to solicit suppliers and cut them out of the supply chain.
The judge ruled that the problems with ADC product shipments to Mood, which sells synthetic delta-8 THC and other intoxicating hemp products, justified the retailer canceling an agreement among the parties. Robinson also said there was no compelling evidence that Mood had used the plaintiffs’ confidential contacts to secretly go after suppliers.
Questions over COAs
The plaintiffs had sought “to prevent Defendant (Mood) from (1) soliciting its suppliers through use of Plaintiffs’ trade secret(s), and (2) utilizing false post-harvest Certificates of Analysis (“COAs”) to sell products acquired from unknown third parties,” according to court papers.
Asheville-based ADC and Green Family Farm, Browns Summit, said they started working with Mood when the online retailer formed in June 2022. ADC initially entered a consulting agreement, sourcing hemp products for Mood, and helping to develop its website, according to the original complaint in the case.
The parties then signed an agreement under which ADC would be the exclusive supplier of “delta-8 THC concentrates, hemp flower and Caviar pre-rolls” to Mood’s Hellomood.co online shop.
Quality issues
Mood said it started having issues with ADC’s shipments in October 2023, when several problems surfaced, including the discovery of mold on some products, and goods arriving late or short. Mood canceled the distribution contract that November.
For its part, ADC said the alleged product issues were unsubstantiated, and were used as a pretense to end the agreement and leverage ADC into a revised contract.
Green Family Farm, the second plaintiff, claimed that Mood falsified certificates of analysis (COAs) and held itself up as the grower of flower strains that GFF provided under the three-way agreement.
But the judge said ADC had otherwise agreed to allow Mood to modify the certificates of analysis, and that Mood has since removed those certificates from its website, so no injunction is justified.
‘100% federally legal’
Mood Product Group is a Wyoming LLC that is registered to do business as a foreign entity in the State of Oklahoma, according to court papers. Mood sells intoxicating hemp in the form of cannabis buds, vapes, pre-rolls, gummies and other edibles that contain THCa, delta-8, delta-9, and CBD, according to the offerings on its website, where it describes itself as “an online source for 100% federally legal cannabis from America’s favorite farms.”
The products are controversial. State attorneys from 20 states and the District of Columbia signed on to a bi-partisan letter in March that urged Congress to use the upcoming Farm Bill to address the spread of intoxicating hemp products across the nation. And cannabis regulators from 45 states last year called on the U.S. Congress to define “hemp” as a crop grown exclusively for industrial or agricultural purposes to close loopholes that have allowed unsafe synthetic THC products to proliferate.
