In California, Catalysts’ crusade continues.
California cannabis company Catalyst has, to put it lightly, a few bones to pick: with the Department of Cannabis Control, with burner distros, and with Glass House, another cannabis company in the state. To triangulate, the company argues, via a couple of lawsuits, that Glass House is using burner distros to enrich itself while the rest of the industry struggles, and DCC isn’t doing enough to close the loophole that enables this.
As of last week, one of those lawsuits, the one against DCC, originally filed in 2021, was allowed to proceed after an appeals court agreed with its argument against another court’s dismissal.
To summarize: HNHPC, Inc. (Catalyst’s parent company) argues that DCC has not implemented a cannabis tracking system that “flags irregularities,” as required by law. The Superior Court of Orange County sided with the DCC after looking at DCC’s contracts for tracking software and related budget requests. HNHPC appealed, arguing that the contracts don’t mean that the DCC has a system in place to identify irregularities, and the appeals court agreed, sending the case back to the Superior Court.
Now, this suit exists along with a newer one, filed in June against Glass House. That one argues that “GHB maintains a network of distributors specifically to handle the illicit black market sales of its cannabis” and that “a significant number of these distributors are what are referred to as ‘burner distribution’ companies (or ‘Burner Distros’). Burner Distros are generally licensed with the State, but evade the payment of state taxation, as well as various safety and other regulations and controls, by selling to the black market and taking advantage of the State’s inability to detect or meaningfully curtail their operations.”
Glass House countered in late June, suing Catalyst for defamation.
“This is a dispute between competitors arising out of Defendants’ outrageous, baseless, defamatory statements falsely accusing Plaintiffs of illegally diverting and distributing cannabis and cannabis products throughout California and the United States,” it reads. “Relying on pure speculation, Defendants assert their self-serving conclusion and then plead with governmental authorities and regulators at the California Department of Cannabis Control (‘DCC’) to investigate Glass House. Defendants then taunted Plaintiffs by asserting that their defamatory statements must be true because Plaintiffs have not filed a defamation lawsuit. Enough is enough.”
Another suit in NY, this time focused on hemp.
Four hemp companies are pushing back against the state’s cannabis regulators after they adopted emergency regulations last month that will impose new limits on the hemp industry. As Cannabis Wire reported at the time, going forward, the ratio of allowable CBD to THC in a product will be 15:1, with a limit of 10 mg of THC per package.
The new suit argues that “these poorly designed and shortsighted new requirements have brought the legalized hemp infused product market to a screeching halt in New York.”
This is the second suit against the state’s cannabis regulators this month. Another was brought forth by a group of veterans who argue that the Conditional Adult Use Retail Dispensary (CAURD) license requirements are “unconstitutional” and that, as a result, these veterans and “other individuals that the MRTA was designed to benefit have been prevented from applying for an adult-use license, and have been (and continue to be) irreparably harmed.” As of this week, this suit has temporarily paused the issuing of CAURD licenses.
As Cannabis Wire reported in March, a court largely sided with regulators in a separate suit against the CAURD program and then regulators settled what remained of the battle focused on the Finger Lakes region.
And, another lawsuit filed in March, by a group of medical cannabis operators in the state who argue, as Cannabis Wire reported at the time, they should be allowed to operate in the adult use market now, is ongoing.
Colorado: Audit calls for better enforcement.
The Colorado Office of the State Auditor this week released findings and recommendations of its performance audit of the Marijuana Enforcement Division, suggesting that the division “could improve its processes for prioritizing retail marijuana store inspections, taking enforcement action when investigations identify evidence that marijuana laws and rules may have been violated, and procuring its seed-to-sale marijuana inventory tracking system.”
Here are two of the key findings:
• “Between Fiscal Years 2019 and 2022, the Division did not inspect 36 percent of newly-licensed retail marijuana stores (40 out of 112 newly-licensed stores) within 1 year of approving those licenses; Division policy states that it will strive to inspect them all within 1 year of licensure.”
• “The Department’s documentation justifying its decision to award a sole source contract in 2018 for the ongoing support, licensing, and hosting of the METRC system did not address why METRC was the only system on the market that could meet the Department’s needs and why the Department did not need to pursue a competitive bidding process, as required.”
“The problems we found during this audit could erode public trust in the Division and Colorado’s
retail marijuana industry because they create the perception that the Division is not regulating the
industry consistently across the state,” said Laura Russell, Legislative Audit Supervisor, in the announcement.
MED has already responded to the audit, and cited COVID as one reason for its enforcement approach in recent years.
Tilray to buy beer brands from Anheuser-Busch.
Tilray’s expansion into beverages continues this week with its announcement that it has struck a deal with Anheuser-Busch to buy eight brands, including well-known beer brands Shock Top and Blue Point Brewing Company, as well as “current employees, breweries and brewpubs associated with these brands.”
“Today’s announcement both solidifies our national leadership position and share in the U.S. craft brewing market and marks a major step forward in our diversification strategy,” said Tilray CEO Irwin D. Simon in the announcement.