Another licensed cannabis operator in Michigan has run afoul of the state’s regulations on THCA and THC after allegedly shipping in THCA crystal from Oregon with the intent of mixing it with in-house cannabis to make distillate.
Inspectors from Michigan’s Cannabis Regulatory Agency visited One Love Labs in Chesaning, where they found evidence that the cannabis producer was importing hemp-derived products. This inversion of product is a growing challenge for cannabis regulators and licensed operators, thanks to the loophole created by the 2018 Farm Bill that allows hemp growers to essentially create cannabis products and sell them across state lines without the massive operational overhead that licensed operators face.
Distillates are created when a cannabis product is stripped down to the actual concentrated THC, and it is often used as a base ingredient in edibles or vapes.
One Love Labs accepted a shipment of over 50,000 grams of isolate on June 25 and entered it into the state’s seed-to-sale tracking system, Metrc, according to the CRA’s July 31 complaint. A company in Oregon shipped the product through UPS.
Two days later, state inspectors showed up and found 10 buckets containing the isolate that were labeled as containing 99% THCA. The inspectors allegedly found old labels that had been removed from the buckets that read “Hemp Extract Batch #5907,” along with a COA for the batch that showed 99% THCA.
Before the inspectors arrived, the first bucket had been mixed with THC oil produced in-house. A sample of the mix was sent for testing, and it failed for residual solvents with a THC content of 87.8%. A second test using samples from all 10 buckets came back with 86.5% THC, but the CRA’s complaint did not mention whether the second set of tests failed for contaminants.
Michigan requires that all THCA be regulated like THC, which means anything with more than 0.3% THCA must also be produced and handled by a licensed operator within the state.
The CRA filed a complaint against One Love Labs with five counts, including failure to purchase marijuana-infused product from an establishment with a state license, improperly entering the products into Metrc, and failing to properly test each product before combining them.
One Love Labs has 21 days after being served with the complaint to request a hearing before any disciplinary actions can be levied.
A spokesperson for One Love Labs could not be reached, and a spokesperson for the CRA declined to comment on the case, aside from forwarding the state’s warning in April about THCA being legally regarded as THC.
One Love Labs appears to be at least temporarily closed based on its website.
“We’ll be back soon and better than ever. Stay tuned for the latest updates on our re-launch,” it says.
Licensed manufacturers use THCA to cut costs
The practice of importing hemp-derived isolate has become increasingly common, and the CRA warned licensed operators that THCA is considered THC when determining whether state law cannabis regulations apply.
This means that although federal law allows for the cultivation and processing of THCA products as long as the total Delta-9 THC content is less than 0.3% of the product’s total dry weight, Michigan law equally applies to THCA and Delta-9 THC, requiring a license to produce or sell either one.
The CRA previously cited Sky Labs LLC in Mt. Morris, for allegedly shipping in hemp-derived THCA isolate from Colorado, which was then tested in California, before it arrived in Michigan to be sold. The state’s complaint also alleged that Sky Labs falsely listed Michigan licensed suppliers when they entered the product into the state’s Metrc seed-to-sale tracking system.
Using hemp-derived products to supplement legal cannabis products can be an appealing short cut for processors, especially in a market like Michigan where average prices are in the basement. In other markets, hemp products have been used to make up for a lack of supply.
Last year, Missouri’s cannabis regulators issued a massive recall on products that were made by Missouri company Delta Extracts, using hemp-derived THC oil. At about the same, the Missouri Cannabis Trade Association reported that several licensed operators had been solicited from out-of-state companies offering to sell hemp-derived THC products.
Finding anecdotal accounts of Michigan producers using imported hemp products is easy to find online, but few people are willing to go on the record about it.
A C-suite officer at a medium-sized grow operation in Michigan, who asked to remain anonymous, explained that the price of THC distillate in the state has gotten so low, that it is no longer financially appealing to make it in-house without using imported THCA.
He explained that THCA crystal powder can be purchased from out-of-state and then the operator can decarboxylate it, which is basically using heat to convert the product into Delta-9 THC.
He also suggested that a lot of the THCA flower that is being shipped across the country is pretty much the same as flower bought in a legal adult-use dispensary.
“The stuff that’s being imported isn’t exactly hemp. It’s straight-up weed,” he said.
