“Cannabis legalization in California is a failure” is a thing you hear because, according to the state, something close to 75% of California’s cannabis economy exists outside of the state’s regulated marketplace. For every weed store doing a banner business, there are three “guys you know” doing just as well — better, probably, since they don’t have to pay taxes or deal with a distributor, or a testing lab, or anyone else.
Most of the blame for this heaped at the feet of lawmakers and elected officials, who have either (or both) taxed cannabis so greedily that untested and suspicious product is preferable to the market, or decided that legalization didn’t matter and theirs would be a dry county or town (and thus an ideal place for any enterprising underground cannabis entrepreneur to set up shop, maybe using WeedMaps).
But you can’t have a regulated economy without regulators and in order for the laws to have any meaning, regulators have to demonstrate that the laws matter. And in dealing with the allegations that Lowell Herb Co. processed cannabis at an unlicensed facility, California’s cannabis regulators have their first major test. What happens next could have serious consequences for legalization.
You’ve probably heard of Lowell — the company sells CBD pre-rolls made from hemp coast-to-coast (I have seen them at my local bodega in New York City, as well as many other bodegas in Brooklyn and Greenwich Village) and also sells THC pre-rolls in California dispensaries. They also opened a cannabis café in September that has since been rebranded as the Original Cannabis Cafe. According to the California Attorney General’s Office, for about three months, from December 2018 to March 2019, the company also processed some of their cannabis at an unlicensed facility in San Luis Obispo County.
According to a civil complaint filed in San Luis Obispo County court on Dec. 13, investigators from the California Department of Fish and Wildlife and the California Department of Food and Agriculture paid a visit to a property used by Lowell in Nipomo, California, on March 13 of last year. There, workers were busy rolling pre-rolls and packaging jars of cannabis in a facility that company official Brett Myers Vapnek admitted to investigators, had no license.
The state seized more than a half-ton of product in various forms: 17,772 pre-rolls in 184 boxes; 19 pounds of loose pre-rolls; 60 pounds of shake, presumably to roll into more pre-rolls; 677.6 pounds of untrimmed flower; 72.9 pounds of mixed trimmed and untrimmed flower; 125.1 pounds of kief; 290.5 pounds of flower in plastic totes; 180.3 pounds of flower in 26 plastic bags, and another roughly 25 pounds of cannabis in either flower or pre-roll form.
According to the state, Lowell “placed unregulated cannabis market, thereby” helping to undermine legalization and put us in the situation we’re in today. It’s not clear how much untested or unregulated Lowell Smokes product made it out to the market, but some did, as per the state, creating a “grave public health and safety risk,” according to the complaint. How much, or where, and how potentially bad? For now, the state won’t say: spokesmen for both the Bureau of Cannabis Control as well as the California Department of Food and Agriculture declined to provide details to Cannabis Now, citing the ongoing investigation.
According to the San Luis Obispo County courthouse, Lowell has yet to respond to the state’s lawsuit.
However, in a statement released to www.theblacklist.xyz, which was among the very first to break the news of the March raid (and to post the accompanying civil complaint filed in San Luis Obispo County court), Lowell insisted that anything sold under its brand was sold only after it was tested by a state–accredited lab — while seemingly admitting that there was some kind of “licensing issue” at the Nipomo warehouse.
“We have never released a product to the market that has not been tested in a state-licensed testing facility,” the company said. “All Lowell products are sourced and sold exclusively in California’s legal cannabis marketplace. We only distribute our products through licensed and verified retail and distribution outlets.”
Following the raid, the company told theblacklist, Lowell moved its distribution operations to a licensed facility in Los Angeles.
According to a 2018 story in the Los Angeles Daily News, Lowell Herb Co. had facilities — or at least planned to hire employees — in Santa Barbara, San Diego, the Bay Area, and Los Angeles as well as in San Luis Obispo. It’s unclear if the company operated facilities in other areas. That article reported that “Lowell’s marijuana plants are grown in a farm in San Luis Obispo County.”
The thing is, both the state and Lowell could be “right” in this situation. It’s not inconceivable that Lowell rolled joints and packed jars at a facility that didn’t have a license, while also making sure that the flower used to pack those products were tested, with the accompanying proof, and were later sold at a licensed dispensary. (For that we may have no better proof than the company’s word, since all this happened before the state’s track-and-trace system became mandatory last summer.) It’s also not clear how much Lowell product passed through the unlicensed warehouse, and where it ended up.
All this will likely come out in the investigation and what turns up, and what the ramifications are, if any, will also influence other merchants’ actions going forward. Lowell might have erred, but now all the onus is on the state of California to not mess this up. Nothing more than the future of legalization might hinge on it.
TELL US, are you surprised that the underground market is still thriving in states with legal marijuana?