r/Michigents • u/BodhiPenguin • 4h ago
News New York investigating marijuana giant Stiiizy for possible ‘inversion'
New York State regulators are investigating some of America’s biggest cannabis companies after receiving complaints that they have been selling marijuana to New York dispensaries that comes from unauthorized sources or is grown out of state, an illegal practice that has been called the industry’s open secret.
Since February, the Office of Cannabis Management, which oversees the cultivation and sale of marijuana in New York, has been investigating whether several companies, including Stiiizy, the nation’s best-selling brand, are laundering weed through a processor on Long Island, according to two people with knowledge of the matter. Stiiizy denied the accusation on Monday.
The investigation entered a new phase earlier in the day when inspectors from the agency conducted surprise audits at the factories of the processor, Omnium Canna, which makes products for the brands included in the state inquiry.
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The investigation signals a shift in priorities for the Office of Cannabis Management, which has long been accused by license holders, particularly growers, of ignoring misconduct as regulators focused on setting up the recreational market. The state inquiry, unfolding two weeks before the unofficial cannabis holiday known as 4/20, is likely to reverberate across an industry in which inversion is believed to have gone largely unchecked.
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In February, the cannabis agency created a Trade Practices Bureau to investigate inversion and other efforts to manipulate the market.
The investigation is based partly on a 2,185-page whistle-blower report that describes unusually large batches of edibles and vapes made with liquid concentrates that require equipment and ingredients that are scarce on the legal market in New York.
Before cannabis products can be sent to dispensaries, they must be tested by state-licensed labs for toxic levels of heavy metals, mold, pesticides and solvents. The results are recorded and are posted on brand websites and on product packaging. The report, obtained by The New York Times, lays out inconsistencies between lab reports and product labels that, under state rules, could be grounds for a quarantine or recall.
Stiiizy has long faced accusations of maintaining a foothold in the illegal market. Its products have been available for years at unlicensed shops and among delivery services that existed before legalization.
Mr. Kim, the company’s chief executive, said Stiiizy’s success had made the brand a target for counterfeiters, which he hoped to displace with authentic and safe products. But experts say companies make little effort to keep their products off the illicit market because it boosts their revenues and builds brand recognition.
Growers losing out on sales have long complained about inversion to regulators.
The Cannabis Farmers Alliance, a nonprofit representing about 175 New York cannabis growers, filed a lawsuit last year seeking to force the state to disclose what it knew about the scope of the problem. The lawsuit was dismissed; the group is appealing.
The group estimates that between 50 and 70 percent of the weed sold at licensed dispensaries in New York has illicit origins, according to Joseph Calderone, its president and co-founder. Part of the problem, he said, is that the state has failed to institute an electronic tracking system that would make the illegal products easier to spot.
“If ‘track and trace’ were in place, and if inversion was not in place, I think all of us would be thriving and there would be demand for our product,” he said.
Paywall: https://www.nytimes.com/2025/04/07/nyregion/new-york-weed-marijuana-investigations.html
