doomed
1 week ago
The dirty secret of California’s bunk legal weed
Posted June 14, 2024 on LA Times
Poisons show up in California’s ‘safe’ weed products.
The social media post is part of “Real CA Cannabis,” a $5-million taxpayer-funded campaign to promote California cannabis as safe, tested and “regulated by the state to protect consumers.”
In reality, that safety is far from certain.
An investigation by The Times, in conjunction with cannabis industry newsletter WeedWeek, found alarming levels of pesticides in cannabis products available on dispensary shelves across the state, including some of the most popular brands of vapes and pre-rolled weed.
Twenty-five of 42 legal cannabis products that The Times and WeedWeek purchased from retail stores and had tested at private labs showed concentrations of pesticides either above levels the state allows or at levels that exceed federal standards for tobacco. The contaminants include chemicals tied to cancer, liver failure, thyroid disease and genetic and neurologic harm to users and unborn children.
Most of the pesticides found were in low concentrations that risk long-term harm by repeated use, though the extent of the health threat may not be known for years.
Vapes tested from five well-known brands had pesticide loads that exceeded federal Environmental Protection Agency risk thresholds for harm from a single exposure, The Times and WeedWeek found. Users might experience irritation to the lungs, eyes and throat as well as rash, headache, diarrhea and abdominal pain.
Some individual products contained as many as two dozen pesticides.
The findings dovetail with scores of complaints that two private cannabis testing labs have filed over the last eight months, reporting pesticides in products certified by other labs as safe. The results, the labs said, suggest some level of contamination in more than 250,000 vapes and pre-rolled joints on store shelves, about the number sold legally in California in a two-day period.
There are strong profit incentives driving contamination. Expanding legal markets encourage intensive growing practices to increase yield known as scale growing, inviting the use of pesticides to protect those high-value crops from insect infestations common in greenhouse environments. Illicit cannabis is grown in small batch, a better practice.
At the same time, the soaring popularity of vapes has created heavy demand for bulk oils, which are made from lower-quality cannabis, often grown legally.
Reviews of confidential lab reports, public records and interviews show California regulators have largely failed to address evidence of widespread contamination in the state’s weed crop.
The state’s requirements for weed testing also have not been updated to include dangerous chemicals currently used in cultivation, including illegal, smuggled pesticides so toxic that law enforcement officers who encounter them are advised to don respirators and take blood poisoning tests.
The health stakes from contaminated weed are high.
An estimated 5 million Californians consume cannabis products in any given month, according to the most recent federal health surveys. The presence of pesticides is particularly fraught for those who turn to weed for relief from medical conditions — conditions that put them at increased risk of harm.
Long-term public health concerns are exacerbated by the growing use of vapes, which contain the greatest contamination levels and are marketed to young adults who are more apt to consider vaping a healthful alternative to tobacco or alcohol.
California Department of Cannabis Control officials declined to make anyone available for an interview. The agency also would not release either external or internal discussions of pesticide contamination, and refused to release information on its ability to test cannabis products, saying such knowledge would encourage bad actors.
It would not furnish the results of pesticide tests it had received from other state agencies and would not provide the safety certificates for cannabis products on the market. It also declined to say what action it has taken on at least 85 contamination complaints it has received since last fall from private labs, or disclose what tainted products it pulled from sale.
“When we receive complaints, we swiftly assess them, conduct appropriate investigations, and take appropriate action,” the agency’s press office said by email.
The agency is now scrambling to initiate California’s first market tests for pesticides, sending a recent email warning license holders of coming “product embargos, voluntary and mandatory recalls, and disciplinary actions.” The private labs raising alarms for many months questioned why authorities did not act sooner.
California cannabis regulators initially responded to those complaints with a single product recall, and in orders that remain confidential, required three other products be removed from store shelves.
Frustrated that more was not done, Josh Swider, the chief executive of Infinite Chemical Analysis Labs and author of most of the complaints, in December sent his summary of contaminated products directly to Gov. Gavin Newsom and cannabis regulators in an email. “Those failing products alone represented 150,000 packages of flower, vapes or pre-rolls for sale to unsuspecting consumers,” he wrote.
“The government’s responsibility does not end after writing regulation.”
After Swider sent his letter, an additional product was recalled for pesticide contamination. The remaining tainted batches were left to sell out.
California’s legalization of recreational cannabis in 2016 ushered in a multibillion-dollar industry estimated to be the largest legal weed market in the world. But many of the promises of legalization have proved elusive. In a series of occasional stories, we’ll explore the fallout of legal weed in California.
Meanwhile, licensing files show the state’s seed-to-sale inventory system contains faulty data, including missing crops, misidentified products and safety tests that don’t match the goods sold. Testing is done by state-approved independent labs, but no state-run lab is accredited to test for pesticides. There is no routine testing for the chemicals in products on store shelves, putting California out of sync with “best practices” adopted by the Cannabis Regulators Assn.
Those gaps leave policing of the industry largely in the hands of labs financially beholden to the companies whose products they test. Legislation to require independent fraud and accuracy checks has remained stalled in Sacramento for two years amid backroom negotiations between industry players and regulators.
“California is dropping the ball on enforcement where public health is concerned,” said cannabis researcher Cindy Orser, a former director of a private California cannabis testing lab.
Testing for harmful chemicals
California requires cannabis products to be tested for 66 pesticides. That list, unchanged since 2018, has not kept pace with current cultivation practices.
Tests conducted for The Times and WeedWeek identified seven off-list pesticides in legal products on store shelves. One brand of vape contained fenvalerate, a fungicide proven to lower sperm counts and prohibited in the United States since 2008. Sixteen products contained pymetrozine, an insecticide known to cause liver cancer and to mimic human hormones, part of a chemical class known as endocrine disruptors, which over time cause reproductive disorders. Pymetrozine is approved for only limited use by the federal EPA, and is banned in the U.K., Canada and Norway.
A pink acai vape from Stiiizy, the state’s top-selling cannabis brand, carried more than 60 times the maximum amount of pymetrozine allowed by federal regulators in cigarettes. But because California does not require testing for pymetrozine, the company that makes Stiiizy products said it is not in violation of state regulation.
“We adhere to all standards and limits set by the State of California, which has some of the strictest testing requirements and pesticide limits in the country,” Stiiizy President Tak Sato said in an email.
The Times and WeedWeek testing also found another off-list chemical, propargite, a carcinogenic insecticide that UCLA researchers have linked to brain-cell death and increased incidence of Parkinson’s disease in Central Valley residents. It showed up in some vapes at nearly three times what is permitted in cigarettes.
Slipping into the legal supply
Deadly carbofuran and methamidophos, banned insecticides usually smuggled from Mexico, continue to appear across California, state Department of Fish and Wildlife, regional water board and county investigative records showed. On a Trinity County farm in 2023, an environmental health report shows officers found a 3-pound tin of Fumitoxin, a poison that emits phosgene gas, along with evidence workers there were suffering severe diarrhea from exposure.
The chemicals occasionally turn up in the legal market. One, methamidophos, was detected in January in dried cannabis at a Van Nuys manufacturer, along with evidence the company was shipping the product across the country. Its license was revoked.
Interviews, confidential lab reports and public agency records now also show a surge in pesticides smuggled from China that contain chemicals not permitted in the United States, nor screened for in legal weed.
These unmonitored chemicals are so toxic California advised cannabis enforcement agents to wear hazmat suits and respirators during field inspections, and to undergo annual blood poisoning tests.
“Repeated inhalation of pesticide residues through regular smoking or vaping is quite concerning as this is a relatively direct route of exposure into the bloodstream,” said Kimberly Paul, an epidemiologist and assistant professor in neurology at UCLA who was lead researcher on the Central Valley study. “Low-level pesticide residues are something to be concerned about.”
National health surveys by the U.S. Substance Abuse and Mental Health Services Administration show those between ages 18 and 25 make up the largest part of the market: More than 40% of young adults used cannabis within the last year. Separate studies by the University of Michigan Institute for Social Research show 1 out of 3 high school seniors last year used cannabis, two-thirds of them by vaping. Despite state laws against marketing to children, many brands reflect this youth appeal, from weed bags modeled after McDonald’s Happy Meals to vape flavorings that mimic bubblegum.
The risk for medical users
Pesticides, which are designed to kill living organisms, have their place in agriculture. Regulation is focused on limiting contact exposure to agriculture workers and residues lingering on fruits and vegetables at the market. Tolerances take into account the body’s ability to filter toxins through the liver.
Smoking and vaping, however, deliver chemicals directly to the lungs, into the blood and to the brain. The only other consumer product intended for smoking in this country is tobacco. Rather than demand pesticide inhalation studies for tobacco, the EPA decades ago decided smoking itself is so carcinogenic as to eclipse other health threats. The agency thus set a universal cap for tobacco contaminants at 0.01 part per million before requiring determination of health impacts, a standard California used to set limits for many chemicals in cannabis.
An illustrated explainer of how consuming weed that is contaminated with dangerous chemicals can have severe impacts on health including neurological damage, endocrine disruption, reproductive harm, loss of appetite, weakness and heart failure.
Arizona State University toxicologist Max Leung, who was part of the state team that in 2017 advised California cannabis regulators on pesticide risks, said the pesticide threats are greater for medical marijuana users with epilepsy, Parkinson’s and other neurological disorders.
But Leung said the lack of federal recognition of cannabis’ widespread use, whether state-sanctioned or not, has left consumers vulnerable. There is a lack of data on health impacts experienced by cannabis users, though some states do solicit health complaints from the public, and in a few cases, those have led to product recalls for pesticides. California does not collect such information.
Rather than uniform national health standards, Leung and his team found a patchwork of disparate state regulations, different pesticides capped at different levels or not capped at all.
“You’ve got all of this contamination, but what do they do?” Leung said. “There’s just no research.”
After passage of Proposition 64 created a legal recreational market in California, toxicologists with the Department of Pesticide Regulation proposed to ban from inhaled weed products 42 chemicals the agency said are harmful to people, the environment or water, according to a copy of the March 2017 proposal.
The limits were rejected amid industry concerns about testing costs and lab capacity.
Six months later, the pesticide agency returned with more relaxed rules. It cut the zero-tolerance list by half, to 21 chemicals, and set limits for 45 other pesticides on a par with tobacco standards. Manufacturers of products that failed screening can attempt to lower the pesticide levels — such as by dilution — or incorporate the weed into edibles, where higher levels are tolerated. If they fail again, according to state regulation, the batches must be destroyed.
Pesticide agency records, including interagency memos and emails, show that since 2018, despite repeated requests, cannabis regulators have not updated the list of chemicals that weed is tested for — even after pesticide regulators made a direct appeal to the governor’s cannabis advisor, Nicole Elliott. In January, the Department of Cannabis Control, which Elliot now heads, said it was working to update those regulations, but as of June no changes had been proposed.
State toxicologists have also been stymied from taking a more active role in protecting the public from cannabis pesticides.
California’s Department of Pesticide Regulation conducts some of the nation’s most sophisticated evaluation of pesticide exposure to the public. It even has an employee whose job title is “cannabis and hemp program manager.”
But when it comes to cannabis, a spokesperson for the pesticide agency said, responsibility for protecting consumers rests solely with the Department of Cannabis Control.
The pesticide regulators did try, early on, to draft their own public health advisories for cannabis, but those were never issued. The agency released copies of six under a public records request, and would not say how many more existed.
One of those advisories was for piperonyl butoxide contamination in cannabis. It was among the chemicals The Times and WeedWeek found in testing.
“Acute toxicity symptoms may include tearing, drooling, runny nose, congestion, and difficulty breathing,” the unreleased advisory read. It added that laboratory animals exposed to the pesticide had more miscarriages and produced offspring with fingers and toes that were sometimes fused.
In 2019, toxicologists in the Department of Pesticide Regulation tried but did not succeed in launching a program to monitor chemicals being used. Internal memos from 2021 show that those same toxicologists were barred from seeing data collected from product safety tests, making it impossible for them to monitor what was circulating in the legal market.
There is no easy way in California to trace contamination. The state does not investigate the sources of pesticides in cannabis goods, but instead relies on a system of paper trails — seed-to-sale inventories and lab testing certificates — to protect the public.
Tests for The Times and WeedWeek showed repeated contamination in small batches of vapes stamped with the unique tracking number of a Van Nuys manufacturer, David Shin.
Among them were Backpack Boyz carts with as many as two dozen pesticides, half of those above state safety limits and including chlorfenapyr, prohibited at any amount, at 2,000 times above the minimum detection level.
The bulk oil for these vapes originated from cannabis grown on a single Central Valley farm. Shin said he bought the oil through a broker and did no independent testing of his own.
He flavored and packaged the vapes and a state-certified lab declared the products pesticide-free. They were then distributed by a wholesaler to Backpack Boyz dispensaries across the state.
Alerted to the pesticides found by The Times and WeedWeek, Shin said he could not unravel the source of contamination. A manager for the wholesaler said the company was launching its own investigation. The owners of Backpack Boyz LLC, which holds no cannabis license, did not respond for comment.
The problem with cannabis trim
The THC oil that fills vape pens is extracted from biomass, plant material made up of lower potency leaves and stalks left after harvest, moldy flower and even high-quality buds that sit too long. Harsh chemicals and extreme temperatures in the extraction process can destroy a few pesticides, but most pesticides become more concentrated. That makes vapes more likely than select flowers to exceed safe limits.
The rise of intense cultivation practices — densely planted greenhouses and industrial warehouses with “sea of green” crops supported by netting — invites infestations of whiteflies, spider mites and mold. Clean cannabis can be commercially grown, but it requires time and care, said Sam Feliciano, a former pest control manager for a high-end Los Angeles brand, Maven Industries. It is cheaper and faster to douse high-value crops with chemicals, a common practice which is what Feliciano and other workers allege in a civil lawsuit that they were ordered to do at Maven.
An illustrated explainer of how chemicals used to control weed-killing pests make their way into cannabis products, and what producers can do when their products fail a lab test.
“I didn’t want to upset them and tell them, ‘No, it’s not OK to do that stuff,’” Feliciano said. “They simply would’ve just got rid of me.” Feliciano alleged in the civil suit that he suffered bouts of nausea, disorientation and confusion brought on by cannabis pesticide treatments. He told The Times that because of the impact to his health, he decided to quit. The workers in November were ordered to have their complaints heard by a private arbitrator.
By email, Maven Industries Chief Executive David Bosworth declined to comment on the lawsuit but asserted the company’s products “are certified as safe and are, in fact, safe for consumer use.”
Legalization has also brought large-scale cultivation out of the mountains and into agricultural areas, including Central Valley farmlands, where airborne pesticides drift from almond groves and grape vineyards.
At the same time, the explosion in vape sales has created heavy demand for distillate. California vape sales tripled from 2020 to 2023 to become a $1.4-billion market, and now only slightly trail those of packaged flower.
To feed this demand, bulk oil manufacturers seek out lower-quality weed, much of it contaminated, to buy at discounted rates.
To meet state screening limits, the extracted oils, or distillates, are blended to dilute pesticides.
One manufacturer who solicits farmers for “dirty” weed defended the practice, saying he provided struggling growers an income source while keeping otherwise unusable cannabis out of the landfill.
The amber-colored bulk oil moves on an opaque market, traded by brokers who operate without license or regulation. It is bought by manufacturers who sometimes will use oil from the same batches to fill thousands of vape cartridges for competing brands.
This cheap commodity oil now dominates the market, selling for a fraction of the cost to produce a clean product.
The cannabis industry’s reliance on low-quality weed enrages old-style farmers such as Mary Gaterud, who nurtures her sun-grown plants on a Humboldt County farmstead that has been her principal means of support for decades.
She is offended by the pleas she regularly receives from those seeking “old, moldy or even dirty trim,” as a San Luis Obispo distributor put it in a text to her in February.
A Humboldt buyer, with “Turn That Trash into Cash” in the subject line, asked for “trim with all levels of pesticides and heavy metals.”
“The people who are doing it right get crushed,” she said. “The bad actors are encouraged and rewarded. And the consumers are poisoned while being told they are safe.”
The Weed Whistleblowers
In February 2022 a group of California cannabis testing labs, upset about what they believed was widespread fraud in weed potency claims, decided to force regulators into action.
They formed a blind round robin, each lab testing retail flower samples without knowing whose work they were checking. In the course of testing for potency, one batch of flower was found to contain three times the allowed level of pyrethrins.
Cannabis regulators were alerted but issued no recall. In fact, it wasn’t until the end of 2023, six years after recreational sales became legal, that California sought to remove a product for pesticide contamination, according to the agency’s published recalls.
When cannabis was first legalized, labs rushed to be licensed to capitalize on the expanding market. But labs with stringent testing methods and expensive equipment complained to the state of losing customers to operators that promised high potency results or had track records for approving most products.
“There’s no checks and balances ... to make sure no one’s doing something wrong when they’re not being watched,” said Swider, of Infinite Chemical Analysis Labs. “That’s all we’ve ever asked for.
“I don’t want to be the judge, jury and executioner. I just wanna let everyone be treated fairly.”
Swider embarked on doing what regulators were not — testing weed specifically for pesticides.
He ultimately sent cannabis regulators 77 complaints about pesticide contamination he found in tests conducted from last October to May.
The complaints included Zoap flower sold by Grizzly Peak Farms and Cru Mai Tai vape carts, both with chlorfenapyr, prohibited at any detectable level; Fog City Farms Shark Bites with too much piperonyl butoxide and spiromesifen; West Coast Cure Biscotti vapes with myclobutanil, and Jack Herer-flavored ones with chlorfenapyr, paclobutrazol, bifenazate and trifloxystrobin. Backpack Boyz vapes contained chlorfenapyr, bifenazate, bifenthrin, etoxazole, malathion, myclobutanil, piperonyl butoxide, pyrethrins and spiromesifen. Most of the manufactures told reporters they were unaware of contamination because their product had been certified as safe by private labs.
It took 41 days from receiving Swider’s complaint for regulators to announce California’s first-ever pesticide recall of a cannabis product, the Zoap flower sold by Grizzly Peak Farms. The lab that had cleared the product for market, ProForma Labs, also lost its license. But regulators took no action against those who grew the weed, a cultivation arm of the Kolas brand. Tests for The Times and WeedWeek showed Zoap sold under a Kolas label also contained chlorfenapyr.
Kevin McCarty, an owner of Sacramento-based Kings Holdings, which grew the Zoap strain, said no zero-tolerance pesticides were used in its cultivation and the cannabis had been certified by state-licensed labs. The Department of Cannabis Control “has not initiated any additional recalls involving us, and we have no additional comment,” McCarty wrote by email.
The Department of Cannabis Control’s second pesticide recall came in January, eight weeks after Swider’s tipoff. The affected Fog City pre-rolls were nearly sold out by the time the public was alerted in January.
Four flavors of Phat Panda vapes also were voluntarily removed from sale, for what regulators told consumers was a labeling mistake — despite outside tests that showed dangerous levels of malathion. California has issued no pesticide warnings since.
Swider’s tests found that 19 varieties of vapes by California’s fourth-largest brand, West Coast Cure, carried a large assortment of illegal pesticide loads. After learning of those results, operators of a San Francisco-based lab, Anresco, undertook their own tests and also notified California regulators of pesticides in eight West Coast Cure products.
Sarah Otis, Anresco’s director of quality assurance, said regulators asked for reams of supporting data, then refused to say whether they would act on the information. “Now that we know there’s contaminated product on the market, like what, what do we do with that?” she said.
Anresco also agreed to test products for The Times and WeedWeek, as did a Santa Cruz-based cannabis testing company, SC Labs. Reporters bought products from dispensaries across the state, choosing some that were the subject of complaints and others at random. The results confirmed Swider’s findings and identified additional contaminated products. Some goods violated state limits for a single chemical. Others, such as vapes by West Coast Cure and Backpack Boyz, contained dozens of undisclosed pesticides.
“We’ve invested millions of dollars to build our business in compliance with California’s laws and regulations. We firmly advocate for the stringent testing mandated by the state to guarantee the safety and excellence of our products,” said Logan Wasserman, the CEO of West Coast Cure’s parent company, Shield Management Group. He contended that responsibility for ensuring product safety was on the labs that declared his vapes pesticide-free.
The Department of Cannabis Control issued no public recalls of West Coast Cure products, but did conduct a surprise inspection at its Long Beach facility. In early May, the agency levied a $3.2-million fine against Wasserman’s company, saying it failed to guard against product tampering, including storing goods in the parking lot in shipping containers that had no security cameras. It was also cited for failing to provide legally required video proving the selection of product samples for lab testing was not rigged.
Wasserman did not respond to questions about the citations.
Directors of labs that had certified products cited as contaminated in Swider’s crusade accused him of seeking a competitive edge, even spiking pesticides into clean samples. They accused clients of having clean material tested and sending contaminated goods to market. None made these statements on the record. They cited fear of lost business, litigation and personal harm.
They also said pesticide testing is inexact, and easily manipulated.
“You could give it to 10 different labs and get 10 different results,” said Paul Hamrah, owner of Verity Analytics, the San Diego lab that approved vapes by West Coast Cure, Phat Panda and Maven that subsequently showed pesticides. Hamrah asserted that those testing products for The Times and WeedWeek tampered with the results as part of “an elaborate smear campaign.”
The labs denied the allegation.
State inspectors visited Hamrah’s lab in January, “trying to shut us down because of cases made against us by Infinite,” Hamrah said. In late April the state suspended Verity Analytics’ license, saying the lab “has engaged in activity that poses harm to public health, safety or welfare.”
The suspension — reviewed by The Times and WeedWeek — said Verity inflated potency of four cannabis products, failed to show accreditation, could not provide the chemical standards it used to check calibration and told regulators it had “unacceptable” accuracy ratings for testing pesticides, molds and solvents. Inspectors also said Verity labeled a pesticide as “non detect” when equipment showed contamination, without offering “any scientific criteria.”
Hamrah said what inspectors took to be a pesticide hit was instead “instrument noise.”
“I am determined to prove my lab is a victim of a grand and elaborate frame job by several labs because they couldn’t compete with us,” he said. “We were expanding and they got scared.”
Meanwhile, Swider became a target. He said he lost clients as word of his activism spread. Then while traveling in March, Swider received a cellphone call from a blocked number.
“I’m going to come and get you and your ... whole family,” the caller said. “You’re gonna pay for this.”
“It makes me want him to get out” of the cannabis industry, said his wife, Kaylena Swider. “He’s like, ‘What would I do?’”
In late May, Swider filed one more round of complaints with the Department of Cannabis Control, alerting the agency to excessive pesticides in 16 products, some of them subject of prior complaints but still for sale.
Days later, he received an email from the agency.
It was sending inspectors to audit his lab.
Cannabis regulators
California’s Business and Professions Code 26011.5 is explicit about the mission of the state cannabis regulatory agency: “The protection of the public shall be the highest priority. … Whenever the protection of the public is inconsistent with other interests sought to be promoted, the protection of the public shall be paramount.”
In industry presentations, Elliot, the Department of Cannabis Control director, often identifies the challenges facing California cannabis as economic.
Chief among her concerns, she told the National Cannabis Industry Assn. in February, is the large swath of California that prohibits dispensaries. These “cannabis deserts,” as Elliott calls them, are the greatest constraint to “scalability,” or expansion, of California’s legal market.
To drive business to licensed dispensaries, Elliott’s agency conceived the Real CA Cannabis campaign.
The social media campaign, launched in February, included ads targeted at seniors, among others, because polling showed they were most swayed by safety messages.
The catchphrases promoting legal weed include “the good stuff” and “quality you can trust.”
The belief that any cannabis product carrying a certificate of analysis, or COA, is safe is foundational for dispensary owners.
“We will not accept it [for sale] if it doesn’t have a COA,” said Dave Sisson, a board member of Foothills Health and Wellness, a legacy dispensary that over two decades has earned the trust of medical providers who send cancer patients to the store in Shingle Springs, east of Sacramento.
To learn some of these certified products carry pesticides, Sisson said, “is absolutely terrible.”
“These are medically compromised people. They have to be very, very careful of what they put into their body.”
“As a retailer, I’m sitting in this really strange position where everything comes to me ‘safe and tested,’” said the owner of a multicounty dispensary chain, speaking anonymously because of concern of being tied to bad publicity for the struggling legal industry. “But it’s so crazy that we’re operating in a system where” many are “gaming it.”
Elliott declined to be interviewed on the extent of the pesticide threat. Her agency selectively responded to requests for public records, and refused to release records regarding policies on pesticide contamination. It contended that it conducts random testing of products for sale to consumers.
Behind the scenes, internal records showed, the cannabis agency as early as late February sent buyers into the field to obtain products on Swider’s lists. They remained stockpiled for months while the department worked to get its Richmond lab — able only to test potency and check for mold — accredited to run pesticide screens. As of early June, accreditation records showed the lab was still not ready, and most of the products flagged for contamination had sold out. On Monday, a spokesperson said the regulatory agency would be able to begin tests on consumer products collected from store shelves by the following week.
Other agencies in the Newsom administration also refused to release cannabis-related records. The Department of Fish and Wildlife provided partial summaries but no records of pesticides encountered by its agents on raids. The Department of Toxic Substances Control said its reports on pesticides encountered on cannabis sites were confidential. The Department of Pesticide Regulation over eight months released only partial records that hinted at the extensive work its staff had undertaken to address pesticide-tainted weed.
Department of Cannabis Control employees, who spoke on condition of anonymity, complained of a lack of willingness within the agency to take a hard line on pesticide contamination. One said she was schooled on the importance of “not disrupting the market.”
In January, as The Times and WeedWeek began asking questions regarding its handling of licensed cannabis products, the agency launched a series of product recalls — not for pesticides, but for mold and misleading potency claims.
The department also asked the Legislature for an $8.2-million budget increase, seeking to hire more enforcement lawyers and laboratory staff to develop testing protocols.
Within 48 hours of being provided the findings of this story for response, the deputy director of lab services left. No public reason for the departure was given.
A day later, speaking to the National Cannabis Industry Assn., Elliott emphasized her concern for public health.
doomed
2 weeks ago
Canna naive L.P. though they could get away with moldy bunk… not knowing that customers who used that shit would find about the caper in a Toronto minute.😂
Home / Legal
Mold scandal in Massachusetts leads to $200,000 fine for marijuana MSO
author profile pictureBy Chris Roberts, Reporter
June 12, 2024
Massachusetts regulators last month fined marijuana multistate operator Holistic Industries $200,000 after a mold outbreak in which the company allegedly “knowingly” sold contaminated cannabis.
According to an April 15 stipulated settlement between the company and the Massachusetts Cannabis Control Commission (CCC) approved May 9, the agency alleged Holistic knew about a mold outbreak at its cultivation facility in the town of Monson since at least November 2020.
Rather than immediately fix the problem, the company sought out permissive lab testing that allowed the tainted marijuana to pass inspection and be sold, leading to “numerous patient and consumer complaints” that Holistic cannabis “smelled and tasted like mold,” according to CCC documents.
Holistic Industries did not respond to several requests for comment.
In a brief statement, CCC spokesperson Tara Smith confirmed the company paid the fine, but she offered no further comment.
In public comments at the CCC meeting on May 9, before the settlement was approved, Commissioner Kimberly Roy praised the employee whistleblowers for alerting officials to the problem and pushed for the creation of a dedicated “whistleblower hotline.”
“We want to thank these employees for being brave enough to speak up,” Roy said.
“We want to make sure consumers and patients are safe, but also our workers.”
Big fine, increased scrutiny
According to the settlement, the CCC determined that Holistic violated four state regulations, including jeopardizing “the welfare of the public.”
The fine is believed to be one of the largest imposed on a U.S. cannabis company for a potential health violation.
Despite increased scrutiny in recent years about the relationship between marijuana operators and independent testing labs, the situation came to light only after employees contacted regulators in fall 2021, according to the CCC.
Employees claimed company leadership knew about the problem, but moldy product was “pushed through anyway,” according to the settlement agreement.
Gaming the system
Critics say the situation highlights several ongoing problems, including lax oversight that allows unscrupulous operators to use labs that provide desirable results, including inflated THC potency.
Altering lab testing results amounts to fraud, but seeking lab results that allow contaminated product to enter the market creates potential for health and safety crises that affect both workers and consumers.
“I think it’s fairly serious. The ease with which the system was gamed is really concerning here,” said Jeff Rawson, the Cambridge, Massachusetts-based founder of the Institute of Cannabis Science, a consumer-advocacy and watchdog group that’s been sounding the alarm over lax testing and safety standards.
“It’s fraud, and it’s also an unlawful occupation hazard.
“You are not allowed to employ people in a workplace that’s full of mold.”
Such problems aren’t limited to Holistic, according to Rawson, who has performed random testing of off-the-shelf cannabis products in Massachusetts and found about 100% of those selected failed his own testing for mold.
‘Knowingly’ sought PCR testing
As part of its settlement with the state, Holistic “neither admits nor denies” any allegations, including:
Mold “was present” throughout Holistic’s 56,000-square-foot cultivation facility, including grow rooms, processing tables, “office spaces, drains, HVAC systems and structural elements.”
Holistic “knowingly” requested polymerase chain reaction (PCR) testing rather than plate assay testing “to ensure the maximum volume of product would reach the market.”
Holistic did not begin remediating the mold outbreak until April 2021, despite knowing about the problem the previous winter.
The company did not cease production during the mold outbreak, nor the remediation efforts.
As part of the settlement, Holistic must, for six months, submit product for testing to a third-party lab agreed to by both the state and the company.
Employee whistleblowers
Holistic’s alleged mold problem became public knowledge in 2021, thanks to employee whistleblowers who leaked word of the situation to local media as well as state regulators.
That year, an independent investigation found “significant” mold contamination “throughout the facility” in Monson, according to a report anonymously leaked to the Daily Hampshire Gazette and other media outlets.
At the time, Jamie Ware, a senior vice president at Holistic, blamed a December 2020 power outage for a “high-humidity event” and said the company found mold in June 2021 after a “pervasive smell” appeared.
Large, privately held MSO
Headquartered in Washington, D.C., Holistic Industries also operates cultivation facilities in Maryland, Massachusetts, Michigan, Oregon, Pennsylvania and West Virginia.
The company operates 15 adult-use stores and medical marijuana dispensaries under its Liberty brand in California, Maryland, Massachusetts, Michigan and Pennsylvania.
In news releases, Holistic describes itself as “among the largest” privately held MSOs in the country.
The company also scored a marketing coup when it secured the rights to sell cannabis using the name and likeness of Grateful Dead front man Jerry Garcia.
Massachusetts and safety
The alleged mold outbreak in Monson is one of several incidents to involve employee and consumer safety in the Massachusetts cannabis industry.
In January 2022, a 27-year-old cultivation worker employed by Florida-based MSO Trulieve Cannabis Corp. died after collapsing at the company’s former grow operation in Holyoke.
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That is growing at scale for you. No one is safe.
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Bunk weed not very popular in California.
California’s Cannabis Industry in Crisis: A Rocky Road Ahead
Posted June 11, 2024 on SF Gate
ImageCalifornia’s Cannabis Industry in Crisis: A Rocky Road Ahead
California's Cannabis Industry Faces Ongoing Crisis Amidst Economic Downturn and Regulatory Challenges.
Vince Ning has a singular perspective on California’s weed industry. He’s the CEO and co-founder of Nabis, the state’s largest pot distribution company, which interacts with every single pot retailer in the state. When Ning looks out across California’s legal weed industry, he sees a market in long, drawn-out freefall.
“It’s like a wave crashing in slow motion,” Ning recently told SFGATE. “People thought the big crash was going to happen in 2022, and there was certainly a crash, but things continued to get worse in 2023. And we are still in 2024, and things aren’t looking that much better.”
The latest data confirms Ning’s point of view, with signs of economic trouble nearly everywhere you look: Overall sales have been falling for the past two years. The number of legal cannabis growers and brands has decreased by more than 70% since legalization first went into effect, according to the Mercury News. A recent report found that pot companies owe the state more than $730 million in back taxes, money that California likely will never see as most of those companies have already folded.
Furthermore, very few new farms are opening, even in places like Humboldt County, the original capital of cannabis cultivation in California. Overall employment in the legal industry is also falling. Even the sacred mantra of California’s cannabis market — that it’s the largest legal market for weed in the world — is at risk, as Michigan now sells more cannabis products per month than California.
Most analysts say that there’s no end in sight to the industry’s contraction. Or as Ning puts it, “We’re still not fully bottomed out.”
This is hardly the outcome Californians predicted in 2016, when voters legalized pot. There were already warning signs back then that making money in legal weed was nearly impossible in the four states that had legalized pot before California, but economists still issued sky-high predictions for the market’s size. More than 10,000 businesses were launched as entrepreneurs jumped into the so-called Green Rush.
Yet today, six years after legal sales started, the first wave of California’s legal cannabis industry is crashing.
California’s Green Rush
California, with its population of more than 39 million people in 2016, was irresistible to cannabis entrepreneurs. The Golden State’s massive population meant that voters had suddenly doubled the scale of America’s market for legal weed by approving legalization of recreational cannabis. It would take two years for legal sales to launch, but capitalists wasted no time investing billions into California’s pot market.
Companies like the retail chain MedMen and distributor Herbl raised massive sums of money under the promise that they would be virtually printing cash. The bet was that folks who may not have been comfortable purchasing illegally, but were hesitant to get into the medical marijuana system, would spend money in recreational pot stores, opening up a whole new subset of customers. Thousands of farmers applied to grow cannabis to feed the state’s massive new cannabis market.
Nicole Skibola can still remember the runaway optimism among entrepreneurs at the time. She joined thousands of folks in opening a new pot business, launching Cosmic View, a Sonoma County pot manufacturer specializing in edibles, topicals and medical-focused products, with her mother in 2017. Skibola and her mother are both cancer survivors who found relief using cannabis during their fights with the disease. They put every ounce of effort into their business, sourcing ingredients like local Sonoma County olive oil for use in cannabis tinctures and using only the best small-batch cannabis they could find.
“Looking back I’m like, man, we were naive,” Skibola told SFGATE in an April interview. “We all thought California was different. California is a huge market. California is sophisticated. California is the cannabis capital of the world. I think there was a hope that California was going to break the mold of other states that had stagnated [and other] companies [that] were already starting to falter.”
But with the birth of a new legal industry also came a new maze of bureaucracy. California’s many layers of government also wanted a share of the newly flowing cash. The 2016 legalization initiative gave local governments nearly total control over regulations, which allowed politicians at both the city and county level to restrict how many licenses were allowed in their communities. They could also require hundreds of thousands of dollars in licensing fees, a trend that one industry blog called “extortionate” in 2019. In some cases, California’s local pot laws allowed politicians to engage in outright criminal corruption, as Politico reported in detail in 2020.
In short, lawmakers across the state saw the new industry as a “cash cow that needed to be milked,” according to Dennis Bozanich, who worked as a cannabis regulator in Santa Barbara (he was once deemed the “cannabis czar” by a local paper) during the first years of legalization. He now runs his own consulting practice for government affairs.
“I think everybody got greedy,” Bozanich told SFGATE, referring to both private companies that expanded too fast and government officials who created expensive regulations.
When sales first opened in 2018, things looked strong. A multibillion dollar pot market grew from nothing in a matter of months. The COVID-19 pandemic gave the market an additional boost in 2020 and 2021, when consumers across the West Coast spent more money on pot as they were stuck at home during pandemic lockdowns.
But the growth didn’t last long. California’s pot sales peaked in early 2021 and have since been coasting at a lethargic and slightly downward trajectory, with overall sales much lower than the estimates from pre-legalization had predicted. For the thousands of new pot business owners who invested heavily on the assumption their businesses would grow quickly — and keep growing for years — that spelled disaster. By the end of 2021, California was offering not a money-printing machine, but an overinvested market with nowhere near enough people buying pot.
Now, midway through 2024, thousands of pot companies have gone out of business, from the state’s biggest players like MedMen and Herbl to small family-run companies like Skibola’s Cosmic View. She decided to shut down her business this past April.
“This is a conscious choice for us to no longer participate in what is a broken regulatory system. It’s not like we ran out of money and had no choice; we decided that it was simply too painful to continue,” Skibola said. “I hear all the time, ‘Next year! Next year will be better!’ But next year is never better. … I personally think that it’s only going to get worse.”
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Weak cannabis sales
California has the largest legal market for weed in the world by total retail sales — a fact Gov. Gavin Newsom likes to point out — but that’s not because California’s pot stores are particularly busy or profitable. California ranks 14th on annual retail sales per resident, behind every other West Coast state, with only $129 in legal pot sold per resident. That’s less than half of the $271 sold per resident in Colorado, according to an April report by LeafLink, a cannabis data company.
These meek retail sales numbers have resulted in California no longer having the largest market in the world by individual products sold. Michigan now sells more overall cannabis products than California, despite having only a quarter of the population.
They’ve also created a devastating cascade of market failures.
First, cannabis farms started going out of business, as weak retail sales and plummeting wholesale prices turned historic farms unprofitable. Then, the cash crunch came for distributors, which are the legally required middlemen between producers and retailers. With retailers running out of money, they stopped paying their bills to distributors. Producers and distributors kept sending legal pot to stores in the hopes they’d get paid eventually, but that only created a massive debt bubble. Now it’s bursting, bringing companies down across the state. Most famously, Herbl, once the largest pot distributor in California, collapsed last June.
The economic crunch has now come for retailers, with hundreds of stores across the state on the verge of failure. The bankruptcy declaration of MedMen, a cannabis retail chain that was valued at more than a billion dollars when California’s legal market first launched, in April served as a warning that things really are dire. The California Department of Tax and Fee Administration said last month that 15% of retailers and distributors are in default on their taxes, which analysts say is close to a death sentence for those businesses as they face a 50% penalty if they miss a single tax payment.
Finally, the problem has worked its way to the government: An April report found the state was owed approximately $732 million in overdue cannabis taxes, money that the government will likely never see because 72% of those companies have gone out of business. Turns out the regulatory maze that led to sky-high licensing fees and tax burdens may not have actually been the way for communities to make money. Local governments from Sonoma County to Monterey County are finding that cannabis tax revenue cannot cover the costs of regulating the industry.
Perhaps that is the most powerful sign that California’s legal weed economy is in trouble: Even the taxman is struggling to make money selling legal cannabis.
Illicit market thrives
While California’s legal market has struggled, a massive underground pot economy has thrived. Billions of dollars of cannabis is being grown, packaged and sold at illegal stores that often look like fully licensed dispensaries. Estimates vary on how large the illicit market is, but the head of enforcement for the state Department of Cannabis Control recently told NPR that the illicit market is “definitely larger” than the legal market.
California has created an almost perfect environment to push customers toward the illicit market. It’s extremely expensive to open a legal business, thanks to high taxes and expensive regulations, and local bans have meant that a majority of the state is still off-limits to legal businesses even if an entrepreneur did want to pay to set up shop. Meanwhile, penalties for running an illegal business were largely reduced from criminal penalties to financial fines in an attempt to reduce the racial harms of cannabis prohibition, which disproportionately impacted people of color.
If a legal business does get up and running, it has to contend with a significant tax burden. California has a 15% excise tax rate on pot, but the effective tax rate can climb to as high as 34% when factoring in state sales tax and local taxes. That’s made California’s legal pot extremely expensive compared with other West Coast states — and made the illicit products, which are sold tax free, a cheap alternative.
All together, it’s created a situation where many entrepreneurs would rather take their chances making money in the illicit market than attempt to run a legal business. Jay Moss, a lieutenant at the Los Angeles County Sheriff’s Department, recently told the Los Angeles Times that some illegal pot shops reopen within hours of being shut down and look at the financial penalties as simply “the cost of doing business.”
These illicit sales undercut the legal market from every corner, depriving licensed businesses of customers they need to stay profitable and governments of tax revenue.
Who’s left in California’s cannabis market?
Some of California’s pot problems have little to do with the state itself: Nearly all of the states that were first to legalize cannabis have seen decreased sales with many legal businesses struggling. That’s because the efficiencies of capitalism have dropped the legal price of pot precipitously, a dynamic predicted by economists, and made it harder to turn a profit selling legal cannabis. Federal prohibition has also been a thorn in the side of pot companies, as federal law makes it significantly more expensive to run these businesses and forces the companies to pay incredibly high tax rates.
There’s also the reality that the majority of businesses fail five years after they are founded. With legal sales six years old in California, it isn’t completely surprising that many of the businesses that first launched are now underwater.
Still, pessimism is the default perspective inside California’s legal industry. The mounting business debts in California’s legal market have been compared to an “extinction event” and left some academics studying California’s market asking whether legal weed can ever win.
Some, however, are quietly wondering whether what’s happened has been a necessary if painful winnowing.
Wesley Hein, an executive at Mammoth Distribution and board member of the California Distributors Association, compared the present pot crash to the dot-com crash of 2001 and 2002, when the Nasdaq lost 78% of its value in two years as exuberance in the Internet Age ended with widespread business failures.
“It looked like anything associated with technology was going to go out of business. And one after another they were going down,” Hein told SFGATE. “But out of those ashes the companies that had real business … were growing. Google, eBay, PayPal all came when it felt like the sky was falling.”
There are reasons to think that, even with its systemic problems and nearly constant failures, California’s market could produce the future great pot companies. It has the size that would allow a company to scale without crossing state lines, a necessity given that the federal ban on marijuana prohibits weed-legal states from trading products between each other. There’s also a theory that given how turbulent California’s market has been, any company that has survived the crash of this first cannabis wave may be more likely to thrive if the market becomes calmer in the future.
Perhaps there’s no better example of that than Nabis, which formed out of the famed Y Combinator startup accelerator. The company grew slowly at first — Ning, its co-founder and CEO, even delivered cannabis himself early in the company’s life — but it’s now on a meteoric rise. In 2023, it was one of the fastest growing private companies in the world, according to Inc, and opened a new 87,000-square-foot distribution facility in the Central Valley, which Nabis claims makes it the largest such marijuana facility in the world. The company is now expanding to Nevada and New York.
Ning told SFGATE that even with the industry struggling all around the state, “cannabis isn’t going anywhere.” If anything, he feels individual company failures could help surviving businesses by limiting competition. That’s certainly been the case for Nabis, which has rapidly filled the void left by Herbl’s collapse and even purchased some of Herbl’s former assets earlier this year.
“More people adopt [cannabis] every day into their daily lives. Someone has to serve them, and if there’s fewer operators out there to do so and times are getting tough, with consolidation happening there’s going to be only so many players that will last,” Ning said.
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