Cannabis giant MedMen was recently hit with a consumer lawsuit alleging the company sent unsolicited text messages without the recipient’s consent in violation of Florida law. The case represents the latest in a string of high-stakes telemarketing lawsuits targeting the cannabis industry.
In Smith v. MM Enterprises USA, filed with the Central District of California, Plaintiff Chelsea Smith alleged that she received text messages from the California-based MedMen despite never providing the company with permission to contact her in violation of Florida’s Telemarketing Sales Act (FTSA). The complaint seeks to represent a class of “at least several thousand persons dispersed throughout Florida who collectively received at least tens of thousands of telephonic sales calls” and seeks over $5 million in damages.
The FTSA was amended in July 2021 to ban unsolicited texts and calls to telephones. Specifically, the act prohibits calls involving an automated system for selecting or dialing numbers, as well as those that play a recorded message upon answering. The law allows for statutory fines of $500 per violation, trebled to $1,500 in the case of a knowing or willful violation, and permits individuals to sue on a class action basis.
The FTSA has been referred to as a “mini-TCPA” due to its similarities with the federal Telephone Consumer Protection Act (TCPA). The FTSA and TCPA both impose stiff penalties on companies that place calls or texts without the recipient’s consent, and in many cases have resulted in large class action lawsuits and ruinous fines for the caller. In recent years, the potential for lucrative awards coupled with the difficulty in defending these lawsuits has caused cannabis businesses to become prime targets for lawyers and professional plaintiffs in the space.
The lawsuit presents an interesting case study in the interstate application of Florida’s mini-TCPA law and is the latest in a string of cannabis companies confronting lawsuits premised on unlawful calling or texting practices. Additionally, the case illustrates the potentially serious ramifications that can arise from sales and marketing practices many cannabis businesses view as compliant or “run of the mill.” Retaining legal counsel experienced with national and state telemarketing laws is essential to protecting your cannabis business from the liability these types of lawsuits can bring and avoiding bet-the-company scenarios.
With a practical approach, Chad provides compliance guidance and litigation defense on matters related to cannabis, advertising and marketing, teleservices, and other consumer protection issues.