Two years since licensed Oklahoma patients could legally purchase cannabis in the state, there are still gaping holes in the testing system, but those holes may finally be getting stitched up soon.
An industry that was erected nearly overnight has only had one legislative session that has had an impact on its operations after former Gov. Mary Fallin failed to call an emergency session to build statutory infrastructure. A large, multifaceted legislative effort this past session was thrown into chaos due to the COVID-19 pandemic and the final product was vetoed by the governor and failed to mount a veto override in the legislature. Only so much can be fixed through administrative rulemaking and, in fact, some of the previously passed legislation has hamstrung the Oklahoma Medical Marijuana Authority from instituting changes.
Those shifting sands and unmitigated uncertainty have left businesses and patients alike with a patchwork of protections and checks and balances against malfeasance. But so far this year, the OMMA has issued two product recalls, one initiated by them and another by a processor doing its due diligence, as well as moving to revoke the license from one of the first and most well-known testing laboratories in the state for reportedly fabricating its test results.
On July 17, the state via the Oklahoma State Department of Health/OMMA filed an application for a show cause hearing for a license revocation and assessment of administrative penalties against Moon Mix, LLC.
Moon Mix was among one of the first to market in the state to offer liquid cannabis distillate in the form of vaporizer cartridges.
On March 26, The Highgrade Testing Lab tested Moon Mix’s Batch 161 and failed it for testing above allowable levels of pesticides. On April 16, Scissortail Laboratory also failed the same batch, according to the OMMA.
The state health department conducted an on-site investigation on April 24 and discovered that Moon Mix “does not request or require test results from other medical marijuana businesses when purchasing, or obtaining, medical marijuana to process. Respondent processes medical marijuana without ensuring it has passed all tests in violation of” state statutes, the application states.
It was learned through the investigation that products processed from Batch 161 as well as other two batches were sold that failed pesticide testing from March to June, according to the application.
Additionally, the OMMA alleges that Moon Mix purchased medical marijuana without test results as well as medical marijuana from out of state. The company also sold products directly to individual family and friends that included unlicensed people, according to the OMMA.
“Through its investigation, the OSDH discovered at least four hundred and seventeen (417) improperly documented invoices and inventory manifests. Most of these documents have an incomplete description of the items sold. The document retention and inventory tracking requirements set forth in OAC 310:681-5-6 are essential to be able to track medical marijuana and/or medical marijuana products in lhe event of a recall and ensure the safety of medical marijuana and/or medical marijuana products for consumers. Furthermore, failure to fully document all sales, purchases, and transfers interferes with the OSDH’s statutory duty to account for all medical marijuana grown in Oklahoma. Proper documentation is one of the most foundational requirements to properly run a business, and Respondent’s gross disregard for the law has placed and continues to place the public’s health and safety in danger,” according to the application.
As a result, the OMMA demanded the surrender of the company’s commercial cannabis license and more than $541,000 in fines.
Moon Mix denied all of the allegations against them except for matters of its address and the fact that a recall was initiated by OMMA, according to the response and defenses to the state’s application.
The case is set to be heard by an administrative court next year.
The second product recall was initiated by the processor itself.
On Oct. 8, Green Motavation, LLC sent out a recall notice to the OMMA. Green Motavation is the umbrella company for a number of brands, most notably Mr. Mack’s. The company initiated a recall of a batch of 100 products that were made from distillate that failed testing for pesticide levels, released under various brand names: Mr. Mack’s, BARZ, Caramel, Dank Confections, Fresh Bake, PotPops, and Pusher.
“As part of our quality control process that is designed to ensure consistency of the medicine that we deliver to patients, Mr. Mack’s periodically runs additional spot check tests not required by the Oklahoma Medical Marijuana Authority. Late yesterday we received notice that our quality control tests revealed that the medical marijuana distillate we purchased with pristine test results from a processor failed our quality control spot check retest,” according to a news release.
While awaiting test results from another lab to confirm the failed test, a recall was initiated.
“While this is a very difficult time for us here at Mr. Mack’s, we entered this industry with our focus on patients and we intend to keep our sights squarely on those patients. We hate having to announce this recall, but we are committed to doing the right thing by our patients and dispensary partners… Hopefully we can serve as a cautionary tale for others to not trust test results in Oklahoma until seed to sale tracking and testing processes are fixed,” the release states.
In an effort to be fully transparent, all of the test results for the batches in question were published alongside the news release.
The recall brought production to a halt and, all said and done, the recall cost the company at least $160,000 in revenue, said Greg Wilson AKA Chilly Mack, the brand manager behind Mr. Mack’s and other brands under the Green Motavation umbrella.
“Because of our insurance and everything like that, we weren’t allowed to release anything back into the market until everything was on point. All testing, everything was good to go… As far as sales lost simply because we were not able to have product in the market and then recovering existing product that was in the market, the deductibles on recall insurance, and they do that per product and not per brand. Well over $160,000 in lost sales and profit. Just for that three-week period, nearly four-week period. We projected between now and November, I mean now we’re in the recovery mode so people who are our die-hards who have been with us since day one, yeah they’re still going to place their same sizable orders and so on and so forth, but the new guys that might have been a $5,000 order may now be a $1,000 order or no order at all. Or instead of it being a weekly order, it’s a bi-weekly order and that order is cut in half. So even with everything being good, it’s still going. We’re still projected to lose $65,000 for November just through the recovery period,” Wilson said.
The distillate that failed processing would otherwise have gone to the market if it were not for internal quality spot checks that are not required by the OMMA, he said.
Because of the amount of demand for the company’s products, they currently provide 70 percent of the flower used to make distillate for Green Motavation’s processing, meaning they purchase approximately 30 percent of the distillate through third parties, Wilson said.
Clean lab results were provided upon purchase, but an attempt to confirm the test results was denied by the laboratory. Further investigation revealed that the lab results appear to be fabricated, Wilson said. And without the additional batch testing required by the insurance company for their recall procedures, the tainted distillate would be on dispensary shelves, in patients’ digestive tracts and lungs, all without the public’s knowledge.
“If it was not for this recall protocol, we wouldn’t have known. And what we’re finding out is, this particular rep, they sell a lot of liters [of distillate] to a lot of people so potentially, there’s a lot of products out there that is contaminated. And these are people who have been duped because we don’t have a process in place to ensure that people are getting what they’re paying for and that the labs for what they’re getting match … There’s no check and balances between these brokers and they’re licensed agents. They are licensed verification agents. They are licensed to whatever company that they’re with. Their OMMA license is valid, their OBN is valid. So to any buyer it’s an aboveboard transaction. There’s nothing abnormal or odd about it, except for when this happens. But ultimately, there’s a different issue that has been uncovered and now OMMA is looking into, which is the quality of the labs, period. For the first year, pretty much, or at least eight months of it, F.A.S.T. Labs was the only lab available that was online doing anything and so we utilized them,” Wilson said.
But F.A.S.T. Labs has also been the subject of on OMMA investigation.
In the next issue, Oklahoma Gazette examines the circumstances that led to F.A.S.T. Labs surrendering their license in the state and speaks with Lee Rhoades, laboratory program oversight manager for the OMMA, about how the quality assurance lab currently coming online and the seed-to-sale tracking system that will be implemented next year will provide the regulatory framework needed to largely eradicate these issues.