Federal illegality defense; Marijuana outputs contract; Controlled Substances Act (CSA); 21 USC § 841(a); § 846; Rohrabacher-Farr Amendment (RFA); Medical & recreational marijuana; Michigan marijuana licensing; MCL 333.27501; MCL 333.27903; MI Admin Code R 420.214; Judgment as a matter of law; Fed R Civ P 50; Federal public policy; Kaiser Steel Corp v Mullins; Kelly v Kosuga; Hemlock Semiconductor Operations LLC v SolarWorld Indus Sachsen GmbH; Jackson Purchase Rural Elec Coop Assn v Local Union 816; 2026 rescheduling

[This appeal was from the ED-MI.] The court held that plaintiff-grower (Hello Farms) could not enforce its marijuana-supply contract against defendants-buyers (GR Vending and CURA MI) because federal courts cannot enforce agreements requiring conduct prohibited by the CSA. Hello Farms sued after GR Vending stopped accepting deliveries under an outputs contract, and a jury awarded Hello Farms $31.8 million in lost profits. The district court rejected defendants’ federal-illegality defense and denied their renewed motion for judgment as a matter of law. On appeal, the court first held that the contract was not limited to medical marijuana because it required the product to pass “local and state recreational cannabis testing requirements,” GR Vending held both medical and recreational licenses, and Hello Farms identified no contract provision limiting the deal to the medical-marijuana market. The court next held that enforcing the lost-profits award would enforce unlawful conduct because “on the face of the contract, the parties promised to commit felonies.” Performance required Hello Farms to possess and distribute marijuana and GR Vending to possess it with intent to distribute or dispense it. The court rejected Hello Farms’s argument that a damages award would merely transfer money, reasoning that federal courts may not help a party realize “the fruits” of an illegal agreement and that the claim arose from GR Vending’s promise to buy an illegal drug. The court also held that the RFA did not save the contract even if viewed as limited to medical marijuana because it did not legalize or decriminalize marijuana and the conduct prohibited by the CSA “remains criminal.” Finally, it held that neither Jackson Purchase balancing nor the April 2026 rescheduling rule made the contract enforceable because agreements to commit serious crimes are plainly unenforceable, and later changes in law did not retroactively validate the 2020 agreement. Reversed.