Brought under the Valentine Act, Ohio’s primary antitrust statute, the case is believed to be a first state enforcement action framing large cannabis operators as participants in a horizontal cartel, rather than as firms exercising unilateral dominance.
While novel as a government‑led case, Ohio’s lawsuit draws on antitrust theories that have already appeared in private litigation. It raises questions. Why has California, the nation’s largest cannabis market, not yet produced a comparable multistate cartel case? What other cannabis competition cases are pending nationally?
Ohio’s Theory: Shelf Space as the Competitive Bottleneck
Ohio’s complaint focuses on horizontal coordination among competing multistate operators, not vertical integration alone. According to the Attorney General, the defendants entered national reciprocal purchasing agreements—sometimes described as “trade‑balance” arrangements—under which MSOs agreed to buy one another’s products across states in exchange for preferred shelf placement in Ohio dispensaries. These arrangements allegedly reduced or eliminated purchases from independent Ohio cultivators and processors, effectively foreclosing them from retail access.
The complaint also alleges that operators shared competitively sensitive, non‑public information, including pricing and promotional plans, to prevent undercutting and to maintain discipline within the cartel. In addition, Ohio claims the defendants offered discriminatory supply and promotional terms to one another that were not available to non‑multistate operators.
Ohio frames the resulting harm broadly: reduced product choice and quality, stifled innovation, and supracompetitive pricing in a market that otherwise should have seen price declines given increased supply. Notably, the complaint asserts that similar conduct occurred outside Ohio, suggesting that the state views the alleged cartel behavior as part of a broader, multistate strategy rather than an isolated local practice.
Private Litigation Recovering and Gaining Momentum
Similar antitrust theories have surfaced in earlier private litigation, including True Social Equity in Cannabis v. Akerna Corp., et al., filed four years ago in the Northern District of Illinois. It challenged the conduct of vertically integrated cannabis operators and alleged exclusionary effects on independent competitors. The litigation did not progress beyond the pleading stage, however, and concluded without a substantive decision on the merits. It is generally referenced as an early, inconclusive attempt to test federal antitrust claims in the context of state‑regulated cannabis markets.
While the Illinois case didn’t get off the ground, antitrust actions involving different types of cannabis products and allegations have been progressing and are now consolidated in federal court in San Francisco. Pulled together in October 2025 by the Judicial Panel on Multidistrict Litigation, the proceedings comprise a growing group of antitrust lawsuits alleging price fixing and market allocation in the market for closed cannabis oil vaporization systems. U.S. District Judge Vince Chhabria is presiding (In re CCell Closed Cannabis Oil Vaporization Systems and Components Products Antitrust Litigation, MDL No. 3161, N.D. Calif.).
The proceedings bring together claims by direct and indirect purchasers who allege that manufacturers and distributors of the products conspired to fix prices, impose minimum resale price floors, restrict access to competing products, and allocate customers and markets.
The litigation involves defendant Shenzhen Smoore Technology Co., Ltd. — often referred to as Smoore — a China‑based manufacturer widely recognized as one of the largest producers of vaping hardware globally, including devices used in both nicotine and cannabis markets. Smoore was founded in 2009 and is the parent company of CCELL, a dominant supplier of ceramic‑coil vape cartridges and closed cannabis oil vaporization systems used by U.S. cannabis brands.
Defendants have pursued an aggressive early dismissal strategy. In February 2026, Smoore and a group of distributors each filed motions to dismiss the Indirect Purchaser Plaintiffs’ Third Amended Class Action Complaint under Rule 12(b)(6). The motions challenge both the sufficiency of the pleadings and the legal viability of the claims, including arguments grounded in antitrust standing and the alleged impact of federal cannabis illegality on state‑law antitrust causes of action.
Although the plaintiffs’ claims arise under federal antitrust law and state antitrust statutes such as California’s Cartwright Act, defendants argue that the underlying market activity is inseparable from conduct that remains illegal under federal law. That argument, if accepted, could narrow or foreclose certain claims, particularly those brought by indirect purchasers relying on state statutes.
Why California Has Not Produced an Ohio‑Style Cartel Case
California is the largest producer and consumer of cannabis in the United States, and—by most measures—the largest cannabis market in the world. But much of that production and consumption occurs in the unlicensed market.
As illustrated by the CCell MDL, California has seen cannabis antitrust litigation, but not the kind of statewide cartel theory being advanced by the Ohio AG. In Richmond Compassionate Care Collective v. Koziol, a California jury found that competing operators conspired to block a rival dispensary by tying up all compliant real estate, resulting in $15 million in trebled damages under the Cartwright Act. That case, however, involved localized market‑entry foreclosure—not coordinated conduct among dominant multistate operators across a controlled retail market.
California’s market structure is different than Ohio’s, too. Licensed production rose roughly 12 percent year over year in 2024 in California even as wholesale and retail prices continued to fall, producing sustained price compression rather than price discipline. Regulators estimate that more than 11 million pounds of cannabis are produced annually in the illicit market, many times licensed output, forcing legal operators to compete directly with unregulated sellers on price. Tax data show legal sales falling to a five‑year low in early 2025 despite relatively stable consumption, underscoring oversupply and fragmentation rather than coordinated restraint.
Retail access further differentiates California from Ohio. Large portions of the state lack meaningful access to licensed dispensaries due to local bans and uneven retail density, conditions closely associated with illicit‑market participation. Against that backdrop, California cannabis litigation has tended to migrate into consumer‑protection cases, upstream component‑level antitrust disputes, and unfair‑competition claims—not horizontal multistate operator collusion.
Can Drug Dealers Make Good Antitrust Defendants?
As a matter of antitrust doctrine, the Sherman Act does not require that the underlying product or market be lawful. It condemns agreements that restrain trade regardless of whether the activity itself violates other laws. Courts have repeatedly rejected the argument that defendants can evade antitrust liability simply because the market is illegal. In theory, then, a cartel of unlicensed cannabis producers—or even drug dealers—engaged in price fixing, market allocation, or exclusionary conduct could satisfy the elements of an antitrust claim.
The absence of “drug dealer antitrust cases” reflects practical constraints rather than doctrinal limits, however. Plaintiffs would face severe standing, proof, and self‑incrimination problems; courts are reluctant to transform antitrust litigation into a substitute for criminal enforcement; and remedies such as injunctions or treble damages make little sense in markets the law is simultaneously trying to suppress. Cannabis occupies an awkward middle ground, i.e., it is federally illegal but state‑licensed, which helps explain why antitrust litigation has focused on licensed actors, upstream inputs, and consumer deception rather than direct cartel claims against the illicit supply chain.
That distinction is reinforced by the Supreme Court’s treatment of in pari delicto, the equitable doctrine barring recovery by plaintiffs “in equal fault.” In Perma Life Mufflers, Inc. v. International Parts Corp., the Court rejected the use of in pari delicto to defeat private antitrust claims, holding that courts should not deny relief where doing so would undermine enforcement of the antitrust laws. The Court emphasized that private suits are a core enforcement mechanism and should not be dismissed merely because plaintiffs participated in the challenged arrangement. In short, while courts will not referee disputes between criminals as a practical matter, antitrust doctrine does not confer immunity on collusion simply because the market itself is unlawful.
Conclusion: Ohio as a Test Case, Not an Outlier
Ohio’s lawsuit represents a meaningful escalation in cannabis antitrust enforcement by advancing a horizontal cartel theory aimed at conduct that has largely escaped scrutiny in state‑licensed markets. The contrast with California highlights why: California’s cannabis economy is shaped by chronic oversupply, fragmented retail access, and sustained competition from a vast unlicensed market—conditions that undermine cartel discipline and have steered litigation toward localized exclusion, upstream inputs, and consumer‑facing claims rather than multistate operator collusion. Ohio’s more constrained licensing regime and concentrated control over dispensary shelf space provide a far more conducive setting for a foreclosure‑based cartel theory. If the case succeeds even in part, it could recalibrate how regulators and courts assess coordination among large cannabis operators and signal that the industry’s long‑standing legal exceptionalism under antitrust law is beginning to narrow.
Sources: Ohio Attorney General press release and complaint; National Association of Attorneys General case listing; publicly filed federal antitrust complaints and coverage of Illinois cannabis litigation; California Department of Cannabis Control, 2024 Cannabis Market Outlook; SFGATE analysis of California cannabis tax data; publicly available California court records and complaints.
