Portland pot company to pay $500K to settle lawsuit over mislabeled vapes

Published 12:59 pm Friday, August 6, 2021

Portland marijuana company Cura Cannabis has agreed to pay more than $500,000 to resolve a class-action lawsuit over its mislabeled Select brand of marijuana vapes.

In January 2020, Cura agreed to pay Oregon a $110,000 “dishonest conduct” penalty for selling vapes that it claimed were 100% marijuana. In fact, the Oregon Liquor Control Commission — now the Oregon Liquor and Cannabis Commission — determined that the employees making the products were adding other ingredients to the Select products.

The court settlement, filed Thursday, provides up to $200 in damages to Oregon residents who bought the mislabeled Select vape cartridges.

As many as 186,000 Oregonians bought the mislabeled products, but in the settlement the parties forecast that “well under 1%” of those who purchased them will file claims. That’s because marijuana sales are cash-only to consumers who bought them through third-party retailers.

Cura must also pay up to $70,000 to the consumers who served as class representatives in the case, plus the costs of locating class members and the cost of a mediator.

Unclaimed funds will be split evenly between the Oregon State Bar and the Oregon Consumer League, a nonprofit consumer advocacy group.

The plaintiffs’ lawyers will ask the court for 25% of the $500,000 settlement, $125,000. Portland attorney Michael Fuller led the case for the plaintiffs.

An attorney for Cura did not immediately respond to a request for comment Friday.

This week’s settlement springs from the state investigation that concluded in 2020. When Cura resolved that deal, it cleared the way for Cura’s sale to Curaleaf, a major Massachusetts-based marijuana company, a month later.

The transaction was worth $400 million at the time, though a subsequent rise in Curaleaf’s share price has inflated the value of the all-stock deal. It’s not clear just how much more the deal was ultimately worth to Cura’s former owners.

Cura was Oregon’s largest marijuana company at the time of its sale last year, and its most controversial. The company traced its roots to a notorious Lake Oswego real estate scandal that cost more than 50 Oregon retirees $1 million in savings.

Cura’s former CEO, Nitin Khanna, stepped down from that role in 2018 after women in the marijuana community highlighted 2012 rape allegations against him. A woman hired as a hairdresser for Khanna’s wife accused him of raping her on the morning of his own wedding.

Prosecutors said DNA evidence proved Khanna had sexual contact with the hairdresser, but they said they opted not to charge him because they couldn’t prove it was not consensual. Khanna denied the accusations but reached a civil settlement with the hairdresser.

After Curaleaf’s sale, Khanna served as CEO of Portland-based Social CBD, which made hemp-based wellness products. Social CBD raised at least $91 million but faltered almost immediately.

The company began laying off employees soon after its 2019 launch, blaming federal CBD regulations. It then sought to back out of a lease for its Pearl District headquarters and the purchase of $2.2 million in manufacturing equipment.

Last month, Social sold its brand to a privately held Southern California CBD company called Kadenwood.