Missouri marijuana operators face fresh turmoil amid recall confusion

October 23, 2023 · MJ Biz Daily

Missouri marijuana executives are hoping to return to some sense of normalcy after the state’s $1 billion-plus cannabis market underwent whiplash last week over the status of 62,000 infused products recalled from store shelves back in August.

The back-and-forth began early last week when cannabis operators thought they had turned a corner in a saga that has cost them millions of dollars in lost sales and inventory.

The initial sense of relief came as state regulators began clearing for sale thousands of edibles, vape pens and other products recalled more than two months ago amid concerns over the distillate they contained.

However, confusion and consternation had replaced the optimism last Friday morning after regulators again barred from store shelves most of the products initially greenlighted for sale.

By that afternoon, the tide appeared to have turned yet again after health regulators notified licensed businesses that tens of thousands of products would now be cleared for store shelves that day.

John Mueller, CEO of multistate operator Greenlight Dispensary, was among those caught up in the regulatory whiplash.

He told MJBizDaily at midday Friday that the state’s Depart of Cannabis Regulation had emailed a statement declaring most of the “administrative hold products will be released on October 20th, at which point they will be available for public sale.”

Mueller and other executives hope the latest turn will position them to recoup some of the lost sales and inventory unleashed by the recall.

Smaller operators, in particular, are feeling the fallout.

The market upheaval dates to August, when the state’s Department of Health and Senior Services (DHSS) recalled more than 6o,000 infused products that contained distillate manufactured and sold by Missouri-based Delta Extraction and its affiliates.

Regulators allege the Robertsville-based processor had used untested “marijuana or converted hemp from outside of a Missouri licensed cultivation facility.”

Delta Extraction has denied those claims.

Missouri regulators suspended the company’s business license on Aug. 2.

Mixed signals

Regulators have warned licensed companies to expect hiccups as product recalls are lifted.

“The department has started the process of lifting some of the current administrative holds on product. During this process, some holds will be temporarily lifted and then re-established,” DHSS spokesperson Lisa Cox told MJBizDaily via email last week.

“Once the process is complete, we will provide information regarding what is permanently lifted and what will remain on hold.”

Meanwhile, many operators are getting mixed signals from the state’s track-and-trace system operated by Florida-based Metrc, according to industry officials.

The software platform is intended to notify retailers which products can be sold or quarantined.

Since August, Missouri retailers, brands and other marijuana businesses have put tens of thousands of infused cannabis products into vaults after regulators imposed an “administrative hold” on the merchandise, followed by a full-fledged recall.

At the same time, hundreds of marijuana businesses have been largely left in the dark awaiting guidance from regulators.

They are expected to get an update this week from the health department, MJBizDaily confirmed.

In its initial recall notice, the Division of Cannabis Regulation (DCR) said the affected products “were not compliantly” logged into the statewide track-and-trace system operated by Metrc.

As a result, the agency said it was unable to verify if the products were derived from in-state marijuana growers or whether they passed testing requirements before entering the retail market.

On again, off again

After getting the initial go-ahead, Kansas City-based Greenlight on Oct. 18 began restocking its shelves with hundreds of products lifted from the recall.

Mueller estimated that much of the roughly 4,500 recalled products at the retailer’s 15 locations were cleared to sell.

“It’s good to get at least two-thirds of this equation in the rearview mirror,” he said at the time.

But on Friday morning, Greenlight told MJBizDaily that all the cleared products were placed back on recall.

Later that day, the company got indications from the DCR that most of the recalled products would be OK to sell by day’s end.

“Every product on the market in the state of Missouri has undergone rigorous testing to ensure safety for consumption, and we look forward to getting these products back on the shelves,” Mueller said.

Despite the setbacks, large, vertically integrated operators such as Greenlight have avoided many of the financial pitfalls tied to the recall because they source raw materials internally, limiting their exposure to outside suppliers.

“Obviously it’s put a little hamper on the business, but the sales volume at stores has not been materially impacted in any way,” Mueller said.

Several products have remained on administrative hold since the recall, including non-infused pre-rolls, unconverted THC oil and most offerings from Stash House, a licensed manufacturer and distributor based in Tulsa, Oklahoma, industry sources told MJBizDaily.

Review process draws industry ire

While some larger companies have deflected the fallout, many suppliers such as Dark Horse Medicinals are still struggling to operate under so many unknowns.

The Arkansas-based provider of concentrates, edibles and vape cartridges had nearly all its products on administrative hold, as of press time, according to Chief Strategy Officer Sean Clarkson.

The company sourced distillate from Delta.

Processing mix-ups through Metrc also dashed company hopes.

The track-and-trace software alerted Dark Horse workers on Oct. 14 that some of the company’s products were lifted from the recall, Clarkson told MJBizDaily.

But those same products were placed back on administrative hold the next day.

That scenario meshed with the warnings from Cox.

Metrc did not respond to inquiries from MJBizDaily.

The mix-ups and confusion are causing new concerns for businesses.

“Having no communication as far as the timeline makes it nearly impossible to operate,” Clarkson said.

“There has not been any kind of formal directive from the state to impacted license holders.”

It’s a complaint shared by several Missouri licensees, including Clovr, the state’s largest manufacturer that supplies nearly every retailer with infused products.

Like Dark Horse, Clovr had several products lifted from recall and then placed back on administrative hold.

Recall delays affecting litigation

The communication lulls and administrative delays have also slowed Dark Horse’s lawsuit against Delta Extraction.

The suit claims Delta Extraction knowingly sold THC concentrate that couldn’t be sold or used in Missouri’s regulated medical or adult-use markets, according to court documents obtained by MJBizDaily.

Delta Extraction did not respond to several inquiries for this story.

Spokesperson Rich Chrismer told MJBizDaily a month ago that Delta’s products were made compliantly under state law, and processes and procedures were approved by regulators.

In late August, a Missouri circuit judge dismissed a Delta Extraction motion to halt the recall.

An administrative hearing weighing its merits was pushed to December. (Full Story)

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