Shenzhen Smoore Technology Co. Ltd and its U.S. distributors are facing allegations that they illegally increased prices through secret distributor agreements implemented since 2016 so as to corner the vape tech market, according to an Arizona dispensary filing a federal lawsuit on Tuesday.
Earth’s Healing Inc, an Arizona cannabis retailer, filed the proposed class action suit in U.S. District Court for California Northern District against Smoore and four American distributors alleging violation of Sherman Antitrust Act.
In its complaint, Smoore–makers of CCELL vape hardware — is accused of conspiring with distributors including Tilt Holdings LLC’s Jupiter Research LLC subsidiary Jupiter Research, Greenlane Holdings LLC’s (NASDAQ: GNLN), 3Win Corp (soon to become Serewin Corp) and CB Solutions LLC (doing business as Canna Brand Solutions) to maintain artificially high prices within the U.S. cannabis vape market.
Court documents state that defendants entered into written and signed agreements between distributors to prevent competition and ensure minimum pricing, with violations leading to penalties being taken out from mandatory security deposits. It appears they also shared confidential customer and pricing data each month among them and violation penalties being taken from such deposits as well.
“Defendant Smoore and its authorized distributors in the US have no significant competitors; instead they hold significant market power when it comes to wholesale distribution of vape pens sold within this market,” according to the lawsuit.
According to court documents, Smoore quickly established itself in the U.S. cannabis vape market upon entering in November 2016, quickly taking an 80% market share before gradually declining over time to 50-60% between 2018-2023 due to new competitors entering.
Smoore responded not by competing fairly but instead through anticompetitive practices such as forcing its distributors to maintain certain price points which Smoore would undercut when competing directly as an indirect rival. The suit alleges this behaviour resulted in direct competitors becoming dependent upon Smoore rather than directly competing against it on merit alone.
This suit comes as part of ongoing legal tussles over market dominance in cannabis vape hardware sales. Smoore initiated proceedings before the International Trade Commission against more than 30 U.S. vape hardware companies; although several withdrew due to resource limitations, ultimately ruling against all remaining defendants before them.
One of these companies, ACTIVE (doing business as Next Level Ventures LLC), later filed counterclaims against Smoore alleging illegal monopolistic practices and filed its countersuit in 2024.
Michael Brosgart, president at ACTIVE, told Green Market Report via email Thursday that it should come as no surprise that price-fixing allegations by plaintiffs had surfaced against Smoore in relation to cannabis vape sales market competition. Furthermore, preliminary expert damages analysis shows ACTIVE has an entitlement of nearly $200 Million due to Smoore’s anticompetitive conduct that led them into court and damages analysis suggests they may receive nearly that sum for damages caused directly as a result.
“Class plaintiffs could potentially owe even more,” stated Hemphill. The proposed class includes any licensed U.S. cannabis business that purchased Smoore vape products through authorized distributors after November 2016. Plaintiffs seek unspecified damages, legal fees and an injunction to prohibit anticompetitive conduct by Smoore’s distributors since then (Smoore Complaint).
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