California cannabis regulators revoked the manufacturing and distribution licenses of Kinder Understanding Sensitive Healing Collective, better known as K.U.S.H. Collective, for allegedly leasing space to an unlicensed cannabis business and other violations.
K.U.S.H. was subject to mandatory recalls of vape products for pesticide contamination on July 17 and Sept 6. Its license was suspended effective Sept. 4, according to the California Department of Cannabis Control’s database of disciplinary actions.
On Oct. 16, the DCC announced K.U.S.H.’s licenses were revoked and 12 brands of products were embargoed to prevent their sale.
“The licensee failed to demonstrate that cannabis products attributed to being manufactured on the licensee’s premises were in fact cultivated, processed, manufactured, packed, or held in a location duly licensed as provided in [the] Medical and Adult Use Cannabis Regulation and Safety Act (MAUCRSA),” the embargo notice stated.
K.U.S.H. owner David Shin told CRB Monitor News a DCC inspection was bad timing, that he was trying to comply with the rules and cooperate with authorities, and he planned on surrendering his licenses. But, “They bulldozed right over me.”
Not a ‘Supherb’ business arrangement
In total, K.U.S.H. is accused of 24 MAUCRSA violations, according to separate notices of provisional license revocation for the manufacturing and distribution licenses. Some of the violations were repetitive, stemming from an Aug. 30 inspection of the Van Nuys facility.
A few of the allegations were related to a business partnership Shin entered into with Alex Liu of Supherb, an unlicensed business, in June. They included subleasing to an unlicensed cannabis operator, failing to get prior approval to operate as a shared-use facility, and failing to produce personnel records.
According to a Notice of Provisional License Revocation on Sept. 15, Supherb would bring additional distribution business to Kinder and, in return, Kinder would manufacture Supherb’s products.
Supherb brought in additional employees, office furniture and promotional items. But Liu refused to sign any agreements with Shin. Shin told investigators Liu had moved out the week prior to the inspection, taking employee personnel files and refusing to return them.
“Shin stated that he hired people from other manufacturing businesses and brought them in to ‘work under the table,’ because he did not manufacture cannabis products often and could not sustain a full-time staff,” the notice said.
In an interview, Shin said he did have the arrangement with Liu, but it was a “ligit” brand licensing agreement. He considered Liu and Liu’s people K.U.S.H. employees, but Liu kept the employee records, which he took and would not return.
But Shin denied telling investigators that he was leasing the license out or that he was paying employees under the table. “I never said that,” he said. “They’re out of their minds.”
K.U.S.H. owner admits to violations, denies some statements
Most of the other violations were related to track and trace and production documentation. According to the two DCC notices of revocation:
- Department staff found nearly 122 pounds of fresh, frozen cannabis without unique identifier tags, that were not located in the track and trace system and that were untraceable to a licensed source.
- Staff observed 2.8 pounds of cannabis flower and 52.48 pounds of 1g Cloud vape cartridges without unique identifier tags.
- Shin provided a Certificate of Analysis for K.U.S.H.’s product that had been taken to the Food & Environment Safety Analytical Lab, an unlicensed lab, in response to products placed under embargo during the Aug. 30 inspection.
- None of the licensee’s product inventory in the track and trace system was present at the premises.
- K.U.S.H. was unable to produce sales receipts or invoices.
- Shin told department staff that some missing product was taken to Kolor Koncepts, a Los Angeles-based licensed cultivator, manufacturer and distributor, without preparing a shipping manifest. “Kolor Koncepts asked the licensee to create a manifest and backdate it,” the notice said.
- Shin was unable to produce video footage of the manufacturing and distribution areas.
Shin admitted in the interview that there were violations, such as not having surveillance video. He said his equipment had broken down because of power outages, so the footage timestamps were inaccurate. He also said the sticker tags had fallen off the product in the freezer, and he hadn’t had a chance to affix new ones.
But he denied some of the statements the DCC said he admitted to, such as that he wanted to bring in new partners or sell his licenses. He said that statement was taken out of context.
When it came to the lack of documentation, Shin said DCC told him to submit all production records for the six years he’s been in business within 48 hours. But when his licenses were suspended in September, they took his METRC license, which he relied on to keep records. He said he couldn’t comply with the request without METRC.
Shin said what’s “really, really frustrating” is that prior to this year, the DCC helped licensees to remain compliant. “My attitude with the DCC has always been if I’ve done something wrong, tell me. I’ll try to fix it.”
But now the DCC is “terrorizing” the licensees, he said. “They are taking down people who are trying to do the right thing.”
Shin said, “If they wanted to take me down, if I had to surrender my license because of this, I’m okay with it.” He said he submitted a request to surrender his license around Oct. 14 because he couldn’t afford the potential financial penalties. Instead, “They revoked me and roasted me publicly. That’s what really pisses me off right now.”
12 cannabis brands embargoed
Because of the lack of production documentation, DCC embargoed nearly 200 batches of vape product from 12 brands.
DCC said it had probable cause that the embargoed products may be adulterated or misbranded, posing a potential risk to consumers. An embargo prevents their sale, distribution, disposal or removal from the location.
Shin said he “can’t blame DCC if something is dirty and they recall it,” but the embargo of all these products was unwarranted.
He said brands such as Hollowtips, Mr. Nice Guy and Cure Injoy, which are subject to the embargo, are great about quality and compliance, and it’s not right for the DCC to penalize good brands.
“That’s what makes my stomach sick,” he said.
When asked for comment, a DCC spokesperson emailed, “The information in the revocation letter speaks for itself.”
Shin said he could appeal the revocation, but he’s not going to because of the embargo situation.
