Missouri's Legal Cannabis Industry Sues Smoke Shops Over 'Hemp' Loophole

ST. LOUIS — Missouri's established cannabis industry is taking aim at what it calls a "shadow market," filing a series of lawsuits this week against nearly 60 smoke shops and retailers across the state. The legal action targets businesses accused of selling high-inducing cannabis products under the legal guise of hemp, a move plaintiffs say skirts costly state regulations and taxes.

The lawsuits, filed in St. Louis County and the Kansas City area, name prominent chains like American Shaman and CBD Kratom among the defendants. The plaintiff coalition, representing roughly 20 licensed marijuana cultivators and dispensaries, argues these stores are selling marijuana mislabeled as "THCA hemp flower"—a product chemically identical to cannabis sold in licensed dispensaries but without the same regulatory burdens.

"We've reached a breaking point," said Chris McHugh, attorney for the cannabis coalition. "For years, we've operated within a strict framework of fees, testing, and compliance, while these stores sell the same product with no oversight, no age verification in many cases, and a significant price advantage." McHugh cited annual state fees of nearly $30,000 for cultivators and over $11,000 for dispensaries, on top of testing costs.

The legal battle hinges on a loophole created by the 2018 Farm Bill, which federally legalized hemp defined as cannabis containing less than 0.3% delta-9 THC by dry weight. However, raw cannabis flower often contains high levels of THCA, a non-intoxicating compound that converts to psychoactive delta-9 THC when heated. Products marketed as "THCA hemp" exploit this chemical technicality.

"This isn't about hemp; it's about unregulated marijuana," McHugh stated. "No Missouri voter approved this free-for-all."

Defendants strongly dispute the claims. Jay Patel, a store owner and board member of the Missouri Hemp Trade Association, called the lawsuits "a predatory tactic to eliminate competition."

"We operate fully within federal law," Patel asserted. "Our products are grown as hemp, tested below the 0.3% delta-9 THC threshold, and we've implemented our own strict age-gating. This coalition is targeting smaller businesses, often minority-owned, hoping we can't afford a legal fight."

The controversy may soon be moot. Congress recently passed a provision, set to take effect in November, that will close the THCA loophole by regulating "total THC" levels. Meanwhile, Missouri lawmakers are poised to debate two bills next week to align state law with the impending federal change.

For small retailers like Nicholas Thomas, a co-owner named in the suit, the outcome will determine his business's future. "The law is clear on delta-9 THC today," Thomas said, comparing THCA flower to unbaked cookie dough. "We'll follow the law, but changing the goalposts now feels unjust."

The lawsuits seek monetary damages and permanent injunctions to stop the sale of THCA flower products at the named stores.

Voices from the Community

"As a licensed dispensary owner who played by the rules, this lawsuit is long overdue. We invested millions to build a safe, regulated market, only to watch these shops undercut us with the same product. It's theft, plain and simple." — Marcus Chen, 42, dispensary owner in Kansas City.

"This is corporate cannabis trying to crush small business. They lobbied for restrictive laws to create their monopoly, and now they're using the courts to enforce it. Where's the free market they claim to believe in?" — Elena Rodriguez, 38, advocate for small business and hemp farmer. [More emotional/pointed]

"The real failure lies with the legislature. They've known about this loophole for three sessions and did nothing. Now, businesses and consumers are caught in a costly legal crossfire because of legislative inaction." — David Park, 55, policy analyst.

"As a consumer, I just want safe, affordable access. If the product is the same, why does the licensed one cost 40% more? This lawsuit feels like an attempt to protect high prices, not public safety." — Sarah Johnson, 29, consumer from St. Louis.