This week, our firm filed an unprecedented lawsuit under the Georgia RICO Act against a large wholesaler of smoke shop products in the metro Atlanta area after the wholesaler’s “hemp” products caused our client’s retail store to get raided, his assets seized, and his employee arrested. Our firm brought the lawsuit as a counterclaim by the client’s retail store, his affiliated store, and his employee after they were sued by the wholesaler for non-payment after the raids.
The wholesaler sold our client “THCA Flower” products that the wholesaler misrepresented as compliant “hemp,” not illegal marijuana, despite knowing and having reason to know that these products would test over the legal limit of THC. Under state and federal law, cannabis and cannabis products with less than 0.3% THC are considered legal “hemp.” In fact, the THCA flower that our client purchased from the wholesaler was later seized by the police and tested well above the legal limit.
Seeking restitution and other damages under the Georgia RICO Act
Our lawsuit asserts several claims against the wholesaler, including under civil RICO laws that allow victims to seek financial compensation when they are harmed by an enterprise’s unlawful activities. While the RICO Act was originally passed to address organized crime and racketeering, Georgia’s RICO law has expanded to allow criminal charges and civil claims against any individual or organization that makes money or obtains property by engaging in a “pattern of racketeering.”
In this case, we are alleging that the wholesaler engaged in a pattern of racketeering by committing multiple crimes against our client, specifically theft by deception and distributing controlled substances by misrepresenting their products as legal “hemp.”
To be clear, our clients, a responsible hemp store owner and his employee, did not start this fight nor set out to sue their supplier. After its store was raided, its property seized, and its employee arrested, however, our client was accused of failing to pay back the wholesaler for the products they had provided on consignment.
Even though the wholesaler’s products were directly responsible for our client’s financial hardship, the wholesaler sued our client for non-payment. Our clients responded the only way they could—by countersuing. Since our firm had represented the client’s store and its employee in connection with the raids and arrests by law enforcement, they turned to us for help against the wholesaler who had left our client and his employee to fend for themselves after selling them “hot” hemp products.
The Legal Landscape of Hemp in Georgia
From 2019 to 2024, the definition of “hemp” under Georgia law mirrored federal law, distinguishing hemp from marijuana based on the legal limit of 0.3% Delta-9-THC. Georgia law also specifically recognized the legality of “hemp products,” which included processed consumable hemp products like vapes, gummies, and pre-rolls that contain hemp extracts like CBD, Delta-8-THC, and other cannabinoids. At the same time, Georgia law limits or prohibits the sale of unprocessed hemp flower or “food products.”
On October 1, 2024, Senate Bill 494 went into effect, creating a comprehensive framework governing the manufacturing and sale of consumable hemp products in Georgia. Unlike federal law, Georgia law now requires hemp businesses to obtain a license from the Department of Agriculture, it prohibits the retail sale of certain hemp products like food products and unprocessed “flower,” and it created packaging and labeling standards for retailers, wholesalers, and manufacturers. SB 494 also set 21+ age limits for buying and selling hemp products.
For more information on Georgia hemp compliance, visit our cannabis, hemp, and marijuana page.
Why This Lawsuit Matters for Georgia Hemp Retailers
To our knowledge, this is the first lawsuit by a hemp retailer in Georgia seeking to hold a wholesaler liable after being raided by the police for selling “hot” hemp products. Too often, retailers are left to defend themselves against criminal charges and civil asset seizures based on the sale of defective hemp products provided by their suppliers.
Retailers are expected to verify that the products they are selling meet the legal THC limit and satisfy all other packaging, labeling, age-restriction, and testing rules. Violations can lead to seizures, arrests, forfeiture actions, and license exposure, even when a retailer relies on a wholesaler’s assurances.
Hemp retailers should ensure they are purchasing inventory from vendors who are licensed to sell products in Georgia and that the products are compliant based on lab results from labs that are licensed in Georgia. The Department of Agriculture’s website maintains a public license search listing hemp-licensed companies.
As we’ve seen here, however, even licensed manufacturers or wholesalers may be creating or selling noncompliant products. When the manufacturer or wholesaler knows or has reason to know their hemp products are non-compliant, they are liable when they sell them to retailers who are later subjected to police raids based on those defective products.
Our Commitment
If your store has been raided or threatened with enforcement over hemp products—or if you believe a supplier misrepresented product compliance with Georgia law—contact the Church Law Firm today.
