{"id":71140,"date":"2023-12-20T10:12:25","date_gmt":"2023-12-20T18:12:25","guid":{"rendered":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/2023\/12\/20\/company-at-center-of-missouris-massive-marijuana-recall-threatens-lawsuit-that-could-upend-regulations\/"},"modified":"2023-12-20T19:45:36","modified_gmt":"2023-12-21T03:45:36","slug":"company-at-center-of-missouris-massive-marijuana-recall-threatens-lawsuit-that-could-upend-regulations","status":"publish","type":"post","link":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/2023\/12\/20\/company-at-center-of-missouris-massive-marijuana-recall-threatens-lawsuit-that-could-upend-regulations\/","title":{"rendered":"Company At Center Of Missouri\u2019s Massive Marijuana Recall Threatens Lawsuit That Could Upend Regulations"},"content":{"rendered":"<\/p>\n

\u201cAny lawsuit will likely include claims relating to the department\u2019s regulatory authority in other areas of the marijuana industry.\u201d<\/em><\/p>\n

By Rebecca Rivas, Missouri Independent<\/strong><\/p>\n

Missouri\u2019s crackdown on a cannabis company accused of illegally importing THC concentrate could lead to a showdown over the state\u2019s authority to regulate the industry.<\/p>\n

Delta Extraction had its license to manufacture cannabis products revoked<\/a> in November, months after a massive recall pulled more than 60,000 products off the shelves<\/a>\u2014which the state says were illegally made with a hemp-derived THC concentrate imported from out of state.<\/p>\n

As the legal battle continues to drag out, the company has upped the ante: If the state continues its efforts to sanction Delta and the recalled products, it will respond with litigation the company\u2019s attorneys believe could gut Missouri\u2019s marijuana regulations.<\/p>\n

\u201cDelta is also not limited to only challenging the [Department of Health and Senior Services\u2019] authority to regulate hemp-derived products,\u201d Delta\u2019s attorney Chuck Hatfield, wrote in a November 15 letter<\/a> to the state. \u201cAny lawsuit will likely include claims relating to the department\u2019s regulatory authority in other areas of the marijuana industry.\u201d<\/p>\n

On the outside, the company with 20 employees located at the end of a dusty farm road near Pacific seems an unlikely candidate for upending Missouri\u2019s regulatory framework.<\/p>\n

But behind the scenes, Delta\u2019s owners and associates include some of the most influential players in Missouri cannabis.<\/p>\n

From its ownership group\u2014which hosted Missouri Attorney General Andrew Bailey (R) at a Ladue fundraiser just two weeks after his office took over defending the state in Delta\u2019s litigation\u2014to the powerful lobbyists and attorneys enlisted to represent the company and its affiliates, Delta is anything but an underdog.<\/p>\n

State Sen. Nick Schroer, a Republican from O\u2019Fallon who chairs the legislative committee that oversees Missouri\u2019s marijuana rules, said Delta hired the \u201cbig guns\u201d to win its license back\u2014including longtime Jefferson City attorneys Hatfield, a Democrat, and Lowell Pearson, a Republican.<\/p>\n

\u201cThat\u2019s where I think this is a very interesting issue because it\u2019s not necessarily political,\u201d Schroer said. \u201cIt impacts all the parties, all individuals across the state, from veterans to people that just like to smoke recreationally and so many others in between.\u201d<\/p>\n

In order to reach a settlement with state regulators, Delta was willing to admit that it \u201cfailed to strictly comply with regulatory requirements,\u201d according to Hatfield\u2019s letter.<\/p>\n

However, the company won\u2019t admit that it did something wrong when it imported a hemp-derived THC concentrate, Hatfield said, because hemp is not a federally controlled substance.<\/p>\n

Lisa Cox, the department\u2019s spokeswoman, said Delta Extraction\u2019s license was revoked for \u201cnumerous violations of rules, including extensive failure to comply with seed-to-sale tracking requirements.\u201d<\/p>\n

Cox also said the company \u201cwas not permitted to use THC in its products unless that THC was created from cannabis grown by a licensed cultivation facility.\u201d<\/p>\n

A question for the courts<\/strong><\/p>\n

At the center of Missouri\u2019s massive marijuana recall is a THC concentrate, or distillate, made partially from hemp.<\/p>\n

Delta bought oil from a Florida lab containing THC-A<\/a> extracted from the hemp plant. Once the oil was in Missouri, the company heated it through a decarboxylation process\u2014which turns it into delta-9 THC, the cannabinoid most commonly known for producing a high.<\/p>\n

Buying hemp-derived THC-A from Florida is much cheaper than producing it from Missouri marijuana.<\/p>\n

While hemp is federally legal, state regulators argue that once hemp-derived THC comes into the marijuana realm, they can regulate it.<\/p>\n

The Missouri constitution \u201cexpressly requires all marijuana and marijuana-infused products sold in Missouri to be cultivated or manufactured in Missouri,\u201d the department argued in a December 4 document<\/a> in the Delta\u2019s appeal of the recall and license revocation before the Administrative Hearing Commission.<\/p>\n

The question currently before the commission is whether or not Missouri regulators have the authority to prohibit licensed companies from infusing Missouri-grown marijuana products with hemp-derived THC.<\/p>\n

The commissioner overseeing the case, Carole Iles, has already said in an August 29 order<\/a> that it\u2019s illegal to add \u201chemp-derived chemically modified \u2018converted\u2019 cannabinoids\u201d to marijuana products.<\/p>\n

That\u2019s why the fight will likely end up in court.<\/p>\n

In September, a federal judge in Arkansas sided with hemp companies in granting a preliminary injunction on a state law aimed at regulating hemp-derived THC.<\/p>\n

U.S. District Judge Billy Roy Wilson said if Arkansas wants to participate in the federal hemp program, then it can\u2019t pick and choose which parts of the law it wants to follow.<\/p>\n

\u201cClearly, under the 2018 Farm Bill, Arkansas can regulate hemp production and even ban it outright if it is so inclined,\u201d the September 7 ruling states. \u201cThe legislature seems to have tried to keep the parts of the program it likes (purely industrial uses) and eliminate the parts it doesn\u2019t (human consumption).\u201d<\/p>\n

Hatfield said that\u2019s what Missouri cannabis regulators are trying to do.<\/p>\n

\u201cThe Division of Cannabis Regulation\u2019s authority to regulate is limited to non-hemp marijuana and does not depend on whether it is used to make THC,\u201d he states in the letter to the department.<\/p>\n

Schroer said he\u2019s heard from numerous marijuana businesses that are suffering from the recall, and he\u2019s not sure the state\u2019s decision to pull Delta\u2019s license and thousands of products from the shelves was the right one. He believes voters wanted a marijuana program where all products were homegrown in Missouri.<\/p>\n

\u201cAnd arguably, was hemp part of that?\u201d he said. \u201cI think we\u2019re gonna find out in the courts.\u201d<\/p>\n

The underdog<\/strong><\/p>\n

Aside from the legal battle, the case sets up another conflict.<\/p>\n

For Missouri\u2019s marijuana cultivators, hemp-derived THC poses a threat to their livelihoods because Missouri marijuana licensees must go through a rigorous and costly regulatory process\u2014one that hemp companies don\u2019t.<\/p>\n

If Delta and other manufacturers can buy hemp-derived THC concentrate for a fourth of the price that it costs to purchase Missouri-grown marijuana THC concentrate, then the state\u2019s marijuana cultivators will suffer.<\/p>\n

But it would be a big win for the state\u2019s hemp farmers.<\/p>\n

Sean Hackmann, president of the Missouri Hemp Trade Association, said Delta sold more than $20 million of distillate that was a mixture of marijuana grown in Missouri and hemp from other states.<\/p>\n

\u201cTwenty million dollars in the Missouri hemp industry would be huge, if that was produced, extracted and processed inside our state,\u201d Hackmann told The Independent in September<\/a>. \u201cBut it was all some other state that benefited from that. Not our Missouri industry.\u201d<\/p>\n

While normally the underdogs, the hemp industry now has people like the marijuana industry\u2019s top lobbyist Steve Tilley and attorneys Hatfield, Pearson and Alec Rosenblum fighting for its interests because it benefits their clients.<\/p>\n

And the web of political ties runs deep.<\/p>\n

A member of Delta Extraction\u2019s ownership team, Josh Ferguson, hosted a fundraiser for Attorney General Andrew Bailey\u2019s election campaign on November 7.<\/p>\n

Delta\u2019s lawsuit against the state has made its way to the Court of Appeals, and that\u2019s where the attorney general\u2019s office normally takes over legal representation in marijuana cases.<\/p>\n

Two weeks before the fundraiser, Bailey\u2019s office began representing the state in Delta\u2019s appeal. The case is being handled by Solicitor General Josh Devine, the highest-ranking lawyer in the attorney general\u2019s office.<\/p>\n

\u201cThe AG\u2019s Office represents state agencies in these cases at the appellate level,\u201d said Madeline Sieren, Bailey\u2019s spokeswoman. \u201cThat is what we did here. Any political activity is separate and apart from his work as attorney general. I would direct any questions about political activity to the campaign.\u201d<\/p>\n

Political power<\/strong><\/p>\n

Delta Extraction is 50 percent owned by A Joint Operation, a management group with three principals: Ferguson, Josh Corson, and Ryan Rich.<\/p>\n

Ferguson is the owner and founder of Kaldi\u2019s Coffee. Corson comes from a real estate background and Rich is owner and CEO of Hot Box Cookies.<\/p>\n

Rachael Herndon Dunn is chief development officer at A Joint Operation and one of the initial founders of Greenway Magazine, which covers the cannabis industry.<\/p>\n

The other half of Delta Extraction is owned by Ozark Highland Cannabis LLC, which is the umbrella for the Midwest Magic brand that uses Delta Extraction\u2019s facility to make its products. Edward Maritz is the registered agent for Ozark, and Jack Maritz is the general manager for Delta Extraction.<\/p>\n

Delta was also manufacturing products for the Conte brand. According to documents filed in both the lawsuit and appeal with the commission, Delta has been producing Conte\u2019s THC distillate for over a year. The majority of the distillate is hemp-derived THC-A combined with a small amount of Missouri marijuana.<\/p>\n

The company has sold 700 liters of this concoction since at least July 2022, Jack Maritz said in his August 14 testimony<\/a> before the Administrative Hearing Commission.<\/p>\n

And it\u2019s sold to 135 Missouri marijuana license holders, with Delta making $20 million since it began offering a hemp-marijuana distillate in April 2022, company leaders said in their testimonies.<\/p>\n

The 700 liters of oil has the potential to make \u201cmillions of packs of edibles,\u201d Maritz said in his testimony.<\/p>\n

Over the summer, Conte Enterprise Holdings hired the Jefferson City lobbying firm Strategic Capitol Consulting. The firm is owned by Tilley, a former state lawmaker and fundraiser for Gov. Mike Parson (R).<\/p>\n

Rosenblum serves as Conte\u2019s attorney.<\/p>\n

The Administrative Hearing Commission will hold a three-day hearing on the company\u2019s appeal of the recall and license revocation in February or early March. If the commissioner sides with the state, then Delta will continue the fight in court.<\/p>\n

A separate lawsuit against the state was filed in September by a company that purchased the recalled THC oil from Delta and is now challenging the regulators\u2019 authority to pull the product from the shelves.<\/p>\n

While not a Missouri licensee, the company, Integrated Sales Solutions, argues that its products are on lockdown and the company\u2019s livelihood is suffering.<\/p>\n

Integrated Sales Solutions\u00a0 is represented in the lawsuit by Marc Ellinger\u2014Bailey\u2019s campaign treasurer.<\/p>\n

Ellinger did not return The Independent\u2019s request for comment.<\/p>\n

This story was first published by Missouri Independent.<\/em><\/a><\/p>\n

\n

Missouri Marijuana Regulators Say A Quarter Of Microbusiness License Winners Are Ineligible<\/a><\/p>\n<\/blockquote>\n

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Photo elements courtesy of rawpixel<\/a> and Philip Steffan<\/a>.<\/em><\/p>\n

The post Company At Center Of Missouri\u2019s Massive Marijuana Recall Threatens Lawsuit That Could Upend Regulations<\/a> appeared first on Marijuana Moment<\/a>.<\/p>\n


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\u201cAny lawsuit will likely include claims relating to the department\u2019s regulatory authority in other areas of the marijuana industry.\u201d By Rebecca Rivas, Missouri Independent Missouri\u2019s crackdown on a cannabis company accused of illegally importing THC concentrate could lead to a showdown over the state\u2019s authority to regulate the industry. DeltaContinue Reading<\/a><\/span><\/p>\n","protected":false},"author":457,"featured_media":0,"comment_status":"false","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[81],"tags":[],"_links":{"self":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/71140"}],"collection":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/users\/457"}],"replies":[{"embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/comments?post=71140"}],"version-history":[{"count":1,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/71140\/revisions"}],"predecessor-version":[{"id":71141,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/71140\/revisions\/71141"}],"wp:attachment":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/media?parent=71140"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/categories?post=71140"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/tags?post=71140"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}