New York State is investigating some of America’s biggest cannabis brands over a tactic that has become pervasive in the absence of strong oversight. New York regulators are investigating whether the California-based brand Stiiizy and other companies are laundering weed through a processor on Long Island. 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 and the other cannabis companies denied the accusation. It is a federal crime to transport marijuana across state lines, so legal weed has to be grown and sold in the same state through licensed businesses. But it is widely known in the cannabis industry that some companies cut costs by sourcing weed from states where it is cheaper or by buying from unlicensed growers. This strategy, known as 'inversion,' undercuts promises that legalization offers consumers a safe supply of cannabis products that can be traced back to local farms. Instead, New York consumers may have been sold products that have not been as rigorously tested for safety, while licensed growers have been left with a glut of weed that they can’t sell in the state’s billion-dollar market. 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. 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. Violations of New York regulations could result in the companies’ being banned from New York or facing more scrutiny in other states. The brands under investigation include Waahoo, Grön, Mfused, To the Moon, and Turn. Regulators are investigating whether the brands’ products were made with weed transported from other states to the warehouses owned by Omnium. The company, which is based in Hauppauge, N.Y., faces the loss of its license if violations are found. 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. 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.

New York Investigates Brands Accused of Selling Illegally Sourced Weed

New York State is investigating several cannabis brands, including Stiiizy, Waahoo, Grön, Mfused, To the Moon, and Turn, for allegedly using a processor on Long Island to source weed from other states, a practice known as 'inversion.' This tactic undermines the safety and traceability of cannabis products in New York, where legalization promises a safe supply traced to local farms. The investigation, unfolding two weeks before 4/20, could result in the brands being banned from New York or facing more scrutiny in other states. The Office of Cannabis Management, which oversees the cultivation and sale of marijuana, has created a Trade Practices Bureau to investigate inversion and other market manipulations. The investigation is based on a 2,185-page whistle-blower report.