Colorado allowed hemp-derived THC into market, lawsuit says

Colorado’s regulated marijuana market is riddled with unsafe and illegal hemp-derived THC, a flow that regulators are unable or unwilling to stop, a state-licensed cannabis company alleges in a lawsuit.

In a March 10 complaint filed in state court in Denver, cultivator and manufacturer Mammoth Farms accused the Marijuana Enforcement Division (MED) of allowing Colorado’s distillate market to be “illegally taken over by synthetic THC from outside” the state.

These “failures” to crack down on criminal activity and ensure consumer safety have put the state’s $1.4 billion industry in “crisis,” according to Mammoth’s suit, first reported by Law360.

The MED declined to comment on the lawsuit, according to the Denver Post.

Suit alleges ‘connections with drug cartels’

The suit by Mammoth, headquartered in the rural town of Saguache, lists crimes allegedly committed by “bad actors who often have connections with drug cartels and other potentially dangerous criminals” that MED has failed to stop, including:

• Allowing “millions of mislabeled and unsafe products” to be “illegally sold in Colorado’s regulated marijuana market each year.”
• Failing to stop the flow of “cheap and dangerous Converted THC smuggled” into Colorado from out of state that contains “methylene chloride, a toxic industrial chemical used in paint stripping.”
• Allowing “bad actors” to thwart the state’s track-and-trace system and through the use of fake “ghost tags.”
• Failing to revoke marijuana industry employees’ state-issued badges even after felony convictions.

“Products flow freely in and out of Colorado’s supply chain without supervision,” the lawsuit reads, in part.

“As a result, Colorado’s plan for regulated marijuana cultivation has essentially become a safe harbor that feeds illegal market activities in other states.”

One consequence, according to the lawsuit, is that “most law-abiding marijuana cultivators and distillers have been forced out of business.”

Lawsuit follows allegations of lax lab oversight

Colorado regulators have previously been accused of lax oversight, including slowness in issuing product recalls and allowing product makers to thwart lab-testing and consumer safety requirements too easily.

State lawmakers are seeking an audit of MED after a cannabis company found what it claimed was unsafe and mislabeled marijuana products on store shelves.

Mammoth CEO Justin Trouard said in a statement to the Post that the “MED is aware of the issues brought up in the suit as well as the damage these problems have caused.”

“It is shocking to see no effort on their part, ” he continued, “and that is why we believe that a change in leadership at the department is necessary for the safety of cannabis consumers and the future of our state’s cannabis industry.”