A class action lawsuit was recently filed in U.S. federal court in Arizona against Chinese vape maker Smoore and its U.S. distributors, alleging that it monopolized the U.S. marijuana vape market through price fixing, market segmentation and other means, causing consumers to pay higher prices. This is the second case of similar allegations this year.
Core Watch:
- MONOPOLY ALLEGATION: Smallmore is accused of manufacturing 80% of the closed cannabis oil vape devices in the U.S. and forcing distributors to adhere to minimum pricing and prohibiting the sale of competing products.
- ANTI-COMPETITIVE BEHAVIOR: The lawsuit alleges that Smallmore conspired with distributors for a decade to share pricing data, divide the market, and collect a $500,000 bond to prevent violations.
- Legal Basis: The plaintiffs seek to compensate consumers for the loss of high prices due to monopolistic practices, relying on the Sherman Antitrust Act, the Clayton Antitrust Act, and 31 state laws.
- CASE PROGRESS: No response from Smallsmore at this time, Case No. 2:25-cv-02259 (Fed. Ct. Ariz..).
Smallscale’s brand CCELL faces an antitrust lawsuit in U.S.
As Law 360 reported on July 2, the company behind Chinese cannabis vape brand CCELL and several of its U.S. distributors have been accused of engaging in anticompetitive price-fixing to gain a dominant position in the market. The class action lawsuit is the second case this year to make similar allegations.
According to the complaint, filed June 28 in federal court in Arizona. Shenzhen Smoore Technology Co. Ltd. and Smoore International Holdings Ltd. orchestrated a scheme to gain market dominance by forcing distributors to agree to and Smoore International Holdings Ltd. orchestrated a scheme to allocate market dominance by forcing distributors to agree to minimum prices and prohibiting them from selling competing products.
Accused of price fixing to monopolize the market
The complaint alleges that “Smoore is a monopoly in the manufacture of products for the U.S. market, producing up to 80% of the closed cannabis oil vape devices in the United States and selling the products directly to marijuana producers and wholesale distributors, including the defendant distributors.”
According to the complaint. Smallmore is both a supplier to and a competitor of the distributor defendants named in the lawsuit, including Jupiter Research LLC, the largest distributor of CCELL products in the U.S. Though these distributors have helped establish Smallmore’s monopoly, the complaint suggests they are forced to do so to continue to have access to these top-selling products.
- “Smallmore’s dominant market share leaves the Distributor Defendants with two choices: either participate in Smallmore’s anticompetitive scheme or face the consequences of not being able to do business with Smallmore, which would risk the loss of a significant source of supply that accounts for as much as 80 percent of the U.S. market for closed cannabis oil atomization systems.”
Legal Basis
The class action lawsuit seeks damages under the Sherman Antitrust Act and the Clayton Antitrust Act, and recovery under the antitrust and consumer protection laws of 31 U.S. states and territories.
The lawsuit’s claims are similar to those filed in California federal court, but the earlier lawsuit was filed by an Arizona-based marijuana retailer seeking damages as a monopoly-injured business. The current lawsuit seeks damages based in part on the theory that consumers had to pay higher prices as a result of that monopolistic behavior.
The complaint alleges that this pattern of horizontal price fixing, market segmentation and exclusive dealing began nearly a decade ago.
According to the complaint. The retailers say that Smallmore and its distributors conspired not to compete for each other’s customers or charge customers less than the specific agreed-upon prices for CCELL products. Those distributor defendants include Jupiter, CB Solutions LLC, which is more widely known as Canna Brand Solutions, and Greenlane Holdings Inc., which are also named defendants in the California lawsuit.
The complaint alleges that Smallmore required distributors to share confidential pricing data and customer identities every month. All distributors avoided competing with each other. Each distributor was required to post a $500,000 bond. If Smallmore found that someone had violated the terms of the illegal agreement, it would deduct money from the violator’s bond.
Representatives for the companies involved did not immediately respond on June 25 to a request for comment. Information about the attorneys for the companies involved has not been released.
The class action lawsuit is represented by Cristina Perez Hesano of Perez Law Group PLLC.
