According to a recent report by Law360, the marijuana retailer Earth's Healing Inc. in Arizona filed a lawsuit in California federal court on Tuesday (11th) against the Chinese manufacturer Shenzhen Smoore Technology Co. Ltd and its four US distributors. The lawsuit alleges that they conspired together to avoid competition.
In the lawsuit, Smoore is described as "the primary manufacturer of e-cigarettes sold in the United States," and accused of colluding with co-defendants in the United States to manipulate product prices since its products entered the American market in November 2016.
Earth's Healing states, "In the United States, aside from the defendant Smoore and its authorized distributors, there are no other significant competitors, and the defendants hold and exercise significant market power in the wholesale distribution of e-cigarettes in the United States.
The "authorized distributors" named as co-defendants include Jupiter Research LLC, Greenlane Holdings LLC, 3Win Corp., and CB Solutions LLC operating under the name Canna Brand Solutions.
Earth's Healing claims that "in order to jointly promote and sell Smoore's e-cigarette, Jupiter and other defendants have reached an agreement, determining the terms of their sale of e-cigarettes to customers in the United States, including the prices charged.
Retailers accuse Smoore and its distributors of reaching a consensus through "written and signed agreements" not to compete for customers with each other, and not to sell products to customers at prices lower than the agreed upon price.
The lawsuit alleges that the defendants supervised and enforced their agreement by authorizing distributors to share monthly confidential customer lists and pricing information, as well as authorizing distributors to report potential violations directly to Smoore.
The lawsuit further alleges that Smoore and its distributors share customer data, including pricing information, on a monthly basis and penalize any party that violates the agreement by deducting funds from the security deposit that Smoore requires distributors to pay.
Earth's Healing states: "The defendants' anti-competitive conduct artificially fixed the price of Smoore e-cigarettes in the United States above competitive levels throughout the class action period, causing plaintiffs and potential class members to pay higher prices for Smoore e-cigarettes.
The proposed class action lawsuit includes any U.S. licensed marijuana companies that have purchased e-cigarettes through Smoore authorized distributors since November 2016.
Earth's Healing has been accused of violating the Sherman Act and is seeking class action certification, unspecified damages and interest, injunctions, costs, and other remedies.
As of Wednesday, Earth's Healing's lawyer had not responded to requests for comment, and the defendant had also not responded to requests for comment.
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