Cannabis is big business, so it was only a matter of time before someone filed a consumer class action claiming that his cannabis was schwag.  It happened in Illinois, where a judge in the Northern District promptly shot it down—not because the plaintiff’s theory was necessarily wrong, but because his theory of deception was a theory of law, not of fact.  The order also provides useful guidance on Article III standing and privity requirements in the context of state-regulated industries.

In McKenzie v. Progressive Treatment Solutions, LLC, No. 25-cv-1768, 2026 WL 636741 (N.D. Ill. Mar. 6, 2026), the plaintiff purchased a cannabis vape cartridge—a cannabis product containing upwards of 74% THC.  That concentration of THC was significant because the Illinois CRTA divides cannabis products into two categories: smokeable products and cannabis-infused products (“CIPs”).  The distinction matters because Illinois limits CIP possession to 500 milligrams of THC and single-package sales to 100 milligrams, while smokeable concentrates face no equivalent cap.  The product at issue—sold in a one-gram quantity at 74% THC potency—far exceeded the CIP thresholds.

So where is the fraud?  Well, the vape cartridge that this plaintiff purchased was labeled as though it was a smokable product—to which no THC cap applies.  The plaintiff argued, however, that the CRTA defines “smoking” as the “inhalation of smoke caused by the combustion of cannabis.”  And, because vaping involves heating rather than burning, the cartridge allegedly was not a smokeable product at all—it was a CIP, unlawfully sold with THC concentration well over the statutory limit. 

The plaintiff therefore demanded his money back on behalf of himself and a class of purchasers.  He did not allege any harm resulting from his use of the cartridge, or even that he ever used the cartridge.  His alleged injury was the purchase price of an allegedly unsafe product. 

The district court dismissed the action.  To start, the court ruled that the plaintiff had suffered an injury in fact by virtue of paying for the product, but he had standing to sue only in connection with the product that he purchased.  His complaint purported to encompass all of the defendants’ “vapable oils” exceeding 100 milligrams of THC, but the court held that a plaintiff cannot acquire standing for unpurchased products “through the back door of a class action.”  Id. at *2-*3.

The most significant portion of the order addresses why the plaintiff’s fraud claims failed on the merits.  The court applied the longstanding Illinois rule that “misrepresentations or mistakes of law cannot form the basis of a claim for fraud.”  Id. at *6.  Because all people are presumed to know the law, “erroneous conclusion[s] of the legal effect of known facts constitute[ ] a mistake of law,” not a misrepresentation of fact.  Id.  Here, the plaintiff did not allege that the defendants misrepresented the contents of the cartridge, its potency, or its efficacy.  He alleged only that the defendants’ products were CIPs and that the defendants concealed that fact by packaging their products as though they were not.  That alleged delineation is legal in nature, depending on the interpretation of such statutory terms as “smoking” and “combustion.” 

In other words, the plaintiffs alleged that the defendants misrepresented the product’s regulatory classification.  That alleged conduct is not an actionable representation of fact.  As the court concluded, “if the CRTA does consider vaping to be smoking, or if it does regard the underlying process as involving combustion—which, by [the plaintiff’s] own admission, requires one to parse both statutory and dictionary definitions—then Defendants neither misrepresented nor concealed anything, period.”  Id. at *7.

The plaintiff’s contract-based claims fared no better.  On the breach of express warranty claim, the court held that no actionable warranty had been identified:  The plaintiff did not allege that the product’s labeling was false, only that it was inconsistent with what CIP regulations would require.  Breach of express warranty requires that goods deviate from the label, not merely from a legal standard.

Both the express and implied warranty claims failed also for lack of privity.  Because the plaintiff purchased the product from a dispensary—and not from any defendant—he was not in privity with the manufacturers.  Nor could plaintiff bring himself within any exception.  First, the “direct dealing” exception did not apply because passive website advertising and general consumer-facing marketing do not constitute the kind of direct, individualized communication contemplated by the exception.  Second, the “third-party beneficiary” exception failed because the plaintiff did not allege that the defendants knew his individual identity—only that defendants had knowledge of consumers generally.

Finally, the unjust enrichment claim was dismissed as a derivative claim that could not survive independently once the fraud claims were extinguished.

We find the McKenzie order useful for a few reasons.  First, it clearly illustrates the mistake-of-law doctrine as applied in consumer fraud litigation in Illinois.  That doctrine is easy to overlook, but is potentially dispositive whenever a plaintiff’s theory of deception turns on the regulatory or statutory characterization of a product (an example being whether the product was being used on- or off-label), rather than on a factual misrepresentation about its physical attributes.  Second, the case reinforces an increasingly firm stance that class action plaintiffs must establish personal standing for each product they seek to challenge at the pleading stage, rather than deferring the question to certification.  Finally, the rulings on privity reinforce the governing rules and vigilantly limit the application of supposed exceptions.  At least in this court, there is no substitute for genuine direct dealing with individual buyers.

The dismissal was without prejudice, leaving the door open for the plaintiff to replead.  Whether he can do so in a way that characterizes the defendants’ conduct as a misrepresentation of fact rather than of law—an inherently difficult task given the theory he has developed—remains to be seen.