Cake Brands the latest target for a hemp class action lawsuit

Lawyers are seemingly filing cases every week now against hemp product manufacturers and brands arguing the THC levels are higher than advertised. The latest target is Cake Brands, which has fought its own battles trying to protect the company’s brand.

The class action case was filed last week by the same legal firm, Smith Krivoshey, that is representing a similar case against Lifted Liquids.

Lifted Liquids reported that it sold $28 million worth of these products in the last nine months. According to the complaint, Cake Brands said it was generating more than $1 million a week in sales in 2021. Annualized, that puts Cake’s sales at at least $36 million in nine months times, assuming sales haven’t increased since 2021 – and that is unlikely.

Similar legal arguments

The latest case was filed against WM Wholesale LLC, which makes and sells a variety of delta-8 vape pens and cartridges under its in-house brand, Cake. The specific products in this case include Cake Brand delta-8 disposable devices and cartridges, including “live resin” delta-8 disposable devices and cartridges, and “classics” delta-8 disposable devices and cartridges.

It’s almost identical language to the Lifted Liquids case, in that the plaintiff Josue Hernandez resides in Florida and bought the products hoping for a mild psychoactive effect. Since the products are labeled and advertised as having less than 0.3% THC, Hernandez expected a less intense high. Also, Hernandez lives in Florida, where possession of nonmedicinal cannabis products with greater than 0.3% THC is illegal.

In his complaint, Hernandez noted he didn’t fail a drug test for a job, but it could potentially happen. He also stated that he continues to buy delta-8 products and use them, but he no longer buys Cake’s products. He said that if he had known the products contained more THC than advertised, he never would have purchased them.

Delta-8 vs. delta-9

The complaint notes that delta-8 is often produced by chemically converting CBD extracted from hemp, rather than being directly extracted from cannabis plants like delta-9 THC. Delta-9 THC derived from marijuana is a federally controlled Schedule 1 drug. On the other hand, delta-8 products derived from hemp are legal to sell, purchase and possess in many jurisdictions so long as the products contain less than 0.3% delta-9 THC due to the language included in the 2018 Farm Bill. This loophole in the legal language has rendered these products legal in many states even as some have attempted to ban them.

The complaint argues that Cake engaged in false advertising because the products contained more than 0.3% THC and the company was aware of this.

In 2022, Law360 reported that AK Futures, which makes the Cake Brands, won a copyright infringement case after a California federal court ordered two more rival businesses to stop selling knockoffs of its delta-8 branded Cake products and pay AK Futures $100,000. This case stated that Cake claimed it had $44 million in sales in 2021 over a nine-month period.

Damages

The complaint wants the consumers to be reimbursed for what they spent on the products. It also requests restitution in the form of the revenues derived from the sale of the products.

This could be significant since Lifted Liquids reported that it reaped $48 million in 2023 for sales of hemp products and Cake looks to be a bigger company.