Skip to main content

Tag: David Sergi

Jury Finds LoneStar Farms, LLC, “d/b/a” Sweet Sensi Committed Constructive Fraud Against CenTex CBD

Written by texashempreporter on . Posted in Business. No Comments on Jury Finds LoneStar Farms, LLC, “d/b/a” Sweet Sensi Committed Constructive Fraud Against CenTex CBD

LoneStar Does Not Own Trade Secrets Listed in Court Filings

 

CenTex CBD beat back a claim by LoneStar Farms LLC, better known as Sweet Sensi, and their lawyer, Lisa Pittman, of misappropriation of trade secrets and intellectual property and allegations of unethical conduct. This ruling of Constructive Fraud and other charges against Sweet Sensi will have significant implications for the rapidly growing and changing hemp industry in Texas.

 

During the case, Greg Autry of Sweet Sensi attacked Wyatt Larew of Wyatt Purp and the Texas Hemp Reporter in an advertisement published in the Austin Chronicle on October 25, 2024. The jury verdict completely vindicated Larew and the Texas Hemp Reporter.

 

“Sweet Sensi tried to cover up its bad behavior and questionable business practices by attacking me. I am grateful that the jury ruled in CenTex’s favor and vindicated me. I am disappointed in my former attorney, Lisa Pittman, who took a contradictory position after providing a legal opinion for me. Justice is the winner this week. Also, Hemp businesses in Texas won because bad actors need to be exposed, and ethical standards must be respected,” said Larew.

 

The conduct of Sweet Sensi’s lawyer, Pittman, has come into question. During the legal process, Pitman moved the case to District court from small claims court, which allowed Sweet Sensi to counter-sue for $250k-1 million in damages. While the trial was progressing, CenTex asked the judge to sanction Pittman. The judge agreed and sanctioned her. Additionally, the judge found it necessary to remind Pittman of her Fifth Amendment right against self-incrimination, raising the concern that her actions could be viewed as criminal, not just unethical.

 

“The Texas Hemp Reporter bases our reporting on court filings and public documents. Factual court reporting does not require commentary for the parties involved to “spin” us with their interpretation of court proceedings,” said Russell Dowden, Publisher of the Texas Hemp Reporter.

 

In this case, the jury ruled that Sweet Sensi did not own certain trade secrets, which contradicts what Autry of Sweet Sensi said in his paid advertisement.

 

“In my opinion, the jury did a good job seeing through the thinly veiled arguments presented by Sweet Sensi attempting to misuse trade secrets and the patent process. Hemp businesses must maintain their integrity so we can continue to supply products for the people who need them the most,” said David Sergi, Attorney for Wyatt Purp and other hemp-related businesses.

{What Does the Future of Hemp Hold for the Lone Star State? Operators will be more accountable to retailers moving forward.}

In addition to finding Sweet Sensi committed constructive fraud, the jury returned unanimous verdicts, finding that Sweet Sensi engaged in false, misleading, deceptive, and unconscionable actions when the jury answered the following questions.

 

  • Did LoneStar engage in any false, misleading, or deceptive act or practice that CenTex relied on to its detriment and that was a producing cause of damages to CenTex? Jury said Yes.

 

  • Did LoneStar engage in any unconscionable action or course of action that was a producing cause of damages to CenTex? Jury said Yes.

 

  • Did CenTex and LoneStar agree that CenTex’s cherry limeade gumdrops ordered from LoneStar would come with red sugar and contain approximately 15 mg of Delta 8 per gumdrop? Jury said Yes.

 

  • Did CenTex and LoneStar agree that LoneStar would provide shelf-ready/consumer-ready gumdrops to CenTex? Jury said Yes.

 

  • Did LoneStar fail to comply with its agreement with CenTex, if any? Jury says Yes.

 

  • Did CenTex substantially rely to its detriment on LoneStar’s promises), if any, and, if so, was CenTex’s reliance foreseeable by LoneStar? Jury said Yes.

 

  • Did LoneStar obtain a benefit from CenTex by fraud or the taking of an undue advantage? Jury said Yes.

 

  • Did LoneStar fail to comply with the Manufacturing Service Agreement? Jury said Yes.

 

  • Did LoneStar own a trade secret in the formula, pattern, compilation, program, method, technique, process, or list of actual or potential customers listed below?

 

  • 1. The rosin-based process used to design and manufacture LoneStar’s rosin-based products. Jury said No.
  • 2. The process for designing and manufacturing LoneStar’s rosin base. Jury said No.
  • 3. The process for designing and manufacturing LoneStar’s rosin-based products. Jury said No.
  • 4. The process for designing and manufacturing LoneStar’s vape cartridges and gummy products. Jury said No.

 

In addition to these findings, LoneStar Farms LLC dba Sweet Sensi must pay monetary damages to CenTex CDB.

 

Additional steps related to the people and businesses involved in this case will be taken in the coming weeks. We will continue to inform the public about any developments.

 

For media interviews. Please contact Kevin Lampe at (312) 617-7280 or [email protected].

 

-30-

RAIDED BY ALLEN PD FOR HEMP

Written by texashempreporter on . Posted in Cannabis News.

On Tuesday, August 27th, Allen Police raided nine hemp shops, accusing them of selling illegal
products containing higher-than-allowed levels of THC. Texas Hemp lawyer David Sergi, who
represents eight of the nine store owners, stated that his clients were operating legally under
both Texas and Federal law.

San Marcos-based attorney Sergi emphasized that his clients are being accused of
manufacturing and distributing illegal tetrahydrocannabinol (THC) products, but under current
state and federal guidelines, the products they sell are legally permissible.


Who is at Fault?
While many argue that the Allen Police Department overstepped by executing search and
seizure warrants, there is a broader context. The DEA had been conducting a joint task force
investigation, targeting similar shops less than a month prior. Subpoenas were issued to several
of these same store owners earlier in the summer, with the DEA seeking access to financial
documents, customer transactions, and supplier lists—requests that Sergi claims violate the
Fourth and Fifth Amendments to the U.S. Constitution.

Sergi, who previously helped overturn a statewide ban on consumable hemp products,
successfully defended his clients against these subpoenas. In that case, a federal judge ruled
that the DEA could not obtain the requested information, marking a significant victory for the
businesses involved.

“This is straight out of a Russian KGB novel or a mafia gangster film,” Sergi remarked,
comparing the heavy-handed tactics to fiction.
The stores recently raided, including Lit Smoke & Vape, Chasing Vapes, and Hazel Sky, are some
of the same businesses Sergi represents in ongoing legal battles with the Allen Hemp Coalition.
Fighting Back

AJ Velador, founder of Hemp Industry Leaders of Texas (HILT), is organizing a GoFundMe page
to assist with bond and legal expenses for those affected by the raids. Velador and his
organization aim to put an end to what they see as unlawful and disruptive actions against legal
hemp operators and retailers in Texas.

Sergi echoed Velador’s concerns, describing the raids as poorly conceived and
counterproductive. The coalition, comprised of small, family-owned businesses, provides
employment to many in the Allen area and serves customers in need of legal cannabinoids,
such as veterans and individuals suffering from pain and PTSD, as alternatives to opioids.
Sergi further warned that the city’s actions could inadvertently open the door for cartels to step
in with unregulated and dangerous products. Industry professionals, he said, strive to work with
law enforcement to ensure that compliant products are sold to adult consumers.

The Bigger Picture for Hemp Operators
The ongoing raids have raised several critical questions for hemp business operators. How is
law enforcement testing these products? Are they using the same standards that certified labs
use to issue Certificates of Analysis (COAs)?

These concerns are especially pressing as the hemp industry faces a new legislative session,
during which lawmakers are expected to address product labeling, packaging, and age
restrictions. The May 2024 hearing of the State Affairs Committee highlighted these issues.

Sergi & Associates Response

David Sergi argues that the actions of the Allen Police Department and the DEA represent a
clear escalation of tactics used across the state to intimidate businesses selling legal hemp-
based products. According to Sergi, the raids resulted in the destruction of products, the seizure
of point-of-sale systems, and the confiscation of personal computers belonging to
employees—all actions that he contends were unlawful.


“These businesses are operating legally under Texas law,” Sergi said. “There is a right way and a
wrong way to address compliance concerns, and they have chosen the wrong way. They will be
held accountable.”

The Allen Hemp Coalition, representing many of the affected businesses, is currently fighting in
court to uphold their legal rights to operate. Sergi and his team have already successfully stayed
a DEA subpoena they deemed a blatant “fishing expedition.”

Texas Senate Affairs Committee Hearing on Intoxicating Hemp Products

Written by David Sergi on . Posted in Legislative.

I recently had the privilege of testifying before the Texas Senate Affairs Committee which  recently held a hearing to discuss the complexities and challenges surrounding cannabinoid products (both consumable and non-consumable). While it was obvious that Senator Perry has real issues with the state of our industry it was equally clear that the rest of the panel appeared receptive to the voices form our industry.

 

The hearing attempted to provide a comprehensive overview of the current landscape, touching on various aspects such as regulatory frameworks, health impacts, and law enforcement challenges. The discussion began with an acknowledgment of the Farm Bill passed in December 2018, which legalized hemp by distinguishing it from marijuana. Hemp, defined as cannabis with less than 0.3% Tetrahydrocannabinol (THC) on a dry weight basis, was excluded from the definition of marijuana.

Regulatory Insights from the Department of Health Services

Tim Stevenson (Ph.D.), a chemist from the Department of Health Services, provided insights into the current regulatory framework for hemp products. Smokable products are treated similarly to consumables, with the state prohibiting their manufacture but allowing their sale. Wholesalers are required to obtain licenses, and the department conducts inspections and tests for Delta-9 (D9) THC, though not for other THC isomers. This regulatory focus is primarily on manufacturers to prevent non-compliant products from reaching retail shelves.

 

Stevenson explained the chemical similarities between D8 and D9 THC, noting that the primary difference lies in the location of a double bond on their molecular structures. Despite this, both isomers bind to the same receptors in the body. He tired to argue without real data that there many products on the market that  exceeding the 0.3% THC limit in retail stores rather than at the manufacturing level

 

Stevenson also shared detailed statistics about the hemp industry in Texas: 642 licensed manufacturers, 3,633 registered hemp storers, and 7,082 retail locations across the state. The department has plans to hire 12 sanitarian inspectors specifically for hemp to ensure compliance and product safety.

 

Health Concerns and Medical Perspectives

Dr. Robert Emmick, an emergency physician, represented the Texas Medical Association, Texas Pediatric Society, and the Texas Public Health Coalition. He discussed the health implications of THC ingestion, particularly focusing on three categories of patients: pediatric accidental ingestions, acute psychosis cases, and chronic users suffering from cannabinoid hyperemesis syndrome (CHS). Emmick emphasized the severe neurological issues THC can cause in children and the potential for THC to interact negatively with other medications. As an industry we agree that children should not consume or be able to purchase cannabinoid products.

 

He advocated for the Department of Health to have jurisdiction over all consumable hemp products to ensure safety and close regulatory loopholes. He also recommended comprehensive labeling of THC products, investment in laboratory testing, and childproof packaging to protect public health. It should be noted that while not endorsing marijuana legalization, the Texas Medical Association supports the Texas Compassionate Use Program and calls for more research to provide evidence-based guidelines for THC use.

 

Law Enforcement Challenges

Major Mark Nelson from the Texas Department of Public Safety (DPS) highlighted the difficulties law enforcement faces due to the lack of clarity in current laws regarding various hemp-derived products. He admitted that  no reliable roadside tests to distinguish between legal hemp and illegal marijuana, and drug-sniffing dogs cannot make this distinction either. Nelson stressed the need for clear legal definitions to aid law enforcement in prosecuting illegal activities related to these products.

Crumbled weed in the shape of Texas and a joint. (series)

 

Legislative and Policy Perspectives

Senator Charles Perry, an author of the original hemp bill, expressed disappointment with the industry’s exploitation of legal loopholes to produce intoxicating products. He emphasized the need for a simple regulatory approach rather than chasing ever-evolving chemical formulations. Perry suggested that the Texas Compassionate Use Program is a more controlled environment for THC products, ensuring safety and integrity in the supply chain. It is clear that he wants to establish one or two preferred providers for cannabinoids under TCUP. However he could not articulate a clear vision as it seemed to dawn on him that if they made hemp based products illegals that he will be handling new business to the cartels and other criminal types and undo the good work done to date while opening the market to those that would use fentanyl.  Finally, he also reluctantly acknowledged the negative impact of these legal ambiguities on the agricultural industry’s focus on hemp fiber production.

 

Senator Jose Menendez pointed out the legalization of hemp with the lack of distinguishable testing methods, made prosecution nearly impossible. This sentiment was echoed by law enforcement officials who highlighted the difficulties enforcement under the current legal framework.

Impact on the Texas Compassionate Use Program and Medical Market

Nico Richardson, CEO of Texas Original Compassionate Cultivation, detailed the challenges faced by the state’s medical marijuana program due to the proliferation of hemp products. He explained that THCa flower, a prevalent product in the hemp industry, While he mentioned that THCA converts to D9 THC when heated. Richardson was really unable to articulate a coherent argument for why hemp should be regulated as opposed to outlawed as his argument was in essence an economically based argument that was a thinly veiled dig at his competition and showed that those in the TCUPS program were interested  only in the economics rather than the cost effective alternative soffered by cannabinoids and hemp industry.

 

It is clear thaty=  availability of cheaper, hemp products has led to a decline in patients within the Texas Original medical program. This trend threatens the future of regulated medical marijuana in Texas, as the hemp market offers more accessible yet potentially safer alternatives so long as the industry is properly regulated by the state.

 

Research and Development Recommendations

 

Dr. Peter Stout, President of the Texas Association of Crime Laboratory Directors, explained that testing for cannabis products has become more complex and expensive since the federal legalization of hemp. The turnaround time for lab results has increased from 7 days to up to 120 days due to the need for more detailed analyses. He highlighted the funding challenges faced by crime laboratories, which prioritize more critical drug testing over cannabis due to limited resources.It is interesting to note that when my firm sends product to be tested by KCA or New Bloom the turn around time is days not weeks and the costs are reasonbable.

 

Balancing Regulation and Innovation

The Texas Senate Affairs Committee hearing on hemp products highlighted the complex interplay between regulation, public health, and industry innovation.. The testimony  underscored the need for a balanced approach that protects public health, supports law enforcement, and fosters responsible industry growth.

To achieve this balance, stakeholders must address regulatory deficiencies , invest in robust testing, and research, and consider the implications of policy decisions on industry viability and ensuring that hemp is available to our veterans as well as our general  population while still being a safe and well regulated. The ongoing dialogue between policymakers, health professionals, and industry leaders will be crucial in navigating the evolving landscape of hemp and cannabis products in Texas.

 

The committee’s deliberations highlighted the urgent need for clear and comprehensive regulations to ensure the safety and integrity of hemp-derived products. By addressing these challenges head-on, Texas can create a regulatory framework that supports innovation in the hemp industry, growth of the industry and access to the much needed products to our veterans  while safeguarding public health and safety.

Federal Judge Orders Stay of DEA Subpoena of Vape Shops in Allen, Texas

Written by texashempreporter on . Posted in Texas Legal & Regulatory News.

Hemp Lawyer David Sergi Fights to Protect the Rights and Privacy of Local Businesses, Their Workers, and Customers

 (Allen/San Marcos, TX) Texas Hemp Lawyer David Sergi won a stay against a Drug Enforcement Agency (DEA) subpoena that targeted nearly every vape shop in Allen, Texas.
“This action by the DEA was clearly on a fishing expedition to gather information unrelated to any public investigation,” said Sergi. “These local businesses operate well within federal and Texas laws and regulations. The subpoena seeks information beyond what the DEA may require in data collection or within its duties. They are seeking information protected by the Fourth and Fifth Amendments.”
On June 25, 2024, the DEA subpoenaed vape shops located in Allen, TX. The subpoena requested these businesses turn over to the government a wide range of their records:
●     All financial and banking records, including all customer transactions
●     Wages of employees
●     All credit card transactions
●     Venmo and CashApp transactions
●     List of all the suppliers that provide products to be sold (including non-Hemp products)
●     Wages of employees
●     Names of distributors or transportation companies/facilitators
“The vape shops are more than willing to share all the records required by federal and Texas law. The subpoena goes way beyond the duties and authority of the DEA and violates the Fourth and Fifth Amendments of the US Constitution,” added Sergi. “The subpoena does not meet the standards of those amendments.”
“The Fourth Amendment requires that the subpoena be limited in scope and relevant in purpose. It also must be specific and not unreasonably burdensome.”
“Each business maintains Certificates of Analysis as required to be kept as part of the business of hemp sales; the financial information from the business, employees, owners, and customers necessarily is not; therefore, much of the DEA subpoena implicates the Fifth Amendment and is far outside anything that could be considered reasonable.”
Sergi represents the Allen Hemp Coalition, which includes Lit Smoke & Vape, Vapex, Hemp & More, Hazel Sky, Allen Smoke & Vape, Chasing Vapes, Vape Shack, Allen Vape, Puff Station, and Isky Vapor.
“These Allen-based businesses operate legally and each day follow all laws and regulations. They are grateful that Federal Judge Amos Mazzant has stayed the subpoena. They are committed to the community and will continue to operate their business to the highest legal and moral standards,” added Sergi.
Here is the text of the ruling issued by United States District Judge Amos L. Mazzant: Before the Court is Movant Allen Hemp Coalition’s Motion to Quash and/or Limit DEA Administrative Subpoena (Dkt. # 1) in the above-entitled matter. It is hereby ORDERED that the enforcement of the subpoenas that are the subject of this motion is STAYED, pending the Court’s full consideration of the matter after a response to the motion is filed. IT IS SO ORDERED SIGNED this 24th day of July 2024.
Attached is a copy of the order and David Sergi’s motion to quash the subpoena.
David Sergi is available for media interviews. Please get in touch with Kevin Lampe at (312) 617-7280 or [email protected].
David Sergi is a San Marcos-based lawyer who focuses on the Hemp industry in Texas and throughout the United States. He has been active in litigation throughout Texas, Florida and most recently Wisconsin. His firm was trial counsel in the case that kept Delta 8 legal in Texas in the case of TDSHS and Hellerstadt v Sky Marketing Corp. dba Hometown Hero, Create a Cig Temple LLC, Darrell Surif and Dave Walden, 03-21-00571-CV. -30-