Charges that the Michigan Marijuana Regulatory Agency (MRA) improperly instituted a massive cannabis products recall on Nov. 17 against a pair of testing laboratories went before a Michigan Court of Claims judge in Detroit Wednesday. Judge Christopher M. Murray heard the start of arguments for a temporary restraining order hearing, calling for a revocation of the recall and monetary damages against MRA that the plaintiff, Viridis Laboratories, says has cost state cannabis businesses more than $230 million.
Judge Murray expressed frustration with the proceedings and offered a quick and dirty solution, after attorneys for Virdis’ and the MRA questioned the only witness for the day, Viridis Lansing’s lab director, Michele Glinn.
“You ask me what the real remedy is? Is that the state issues something that says, “We’re satisfied, and we approve of Viridis doing this testing.” Minutes later, he clarified, “And this is not a ruling. I’m not going to make a ruling until we’re all done but this is my concern. My concern is more of a practicality as to what the state should be doing to tell the truth now. And so, I don’t know if you can talk to anybody at the agency. Maybe they don’t care what I have to say…Maybe I’m wrong. Maybe that’s not what they’re really looking for but as far as I can tell, that would be the best remedy these people can have.”
[Download Viridis’ complaint – Watch a recording of the hearing]
The hearing on the TRO is set to resume this morning at 10:00 a.m. with the MRA’s to bring a witness to the stand.
The complaint describes the recall as “unjustified and retaliatory, a way for the MRA to “level the playing field” so that all of the marijuana safety compliance facilities have an equal share of the testing market.
“There is no public health or safety risk justifying the recall at all, and we respectfully request the Court to provide relief to Viridis and bring accountability and oversight to an agency that has far exceeded its authority.” Attorney Kevin Blair, with Honigman, LLP, said in a Viridis news release announcing the lawsuit.
Asked for comment on the case, a spokesperson for MRA said the agency could not comment on pending litigation.
The MRA issued a Notification of Marijuana Product Recall on Nov. 17, for all marijuana products tested by Viridis Laboratories and Viridis North between Aug. 10 and Nov. 16 due to unreliable results, leaving more than 400 dispensary owners in Michigan scrambling to replace impacted inventory as growers braced for those returns.
Inhalable marijuana concentrate products such as vape carts, live resin, distillate, and any other cannabis concentrate created through residual solvent extractions were not part of the recall.
“The recall is the latest and most egregious action by the MRA in a prolonged campaign of harassment aimed at Viridis,” David Russell, an attorney for Viridis with Foster, Swift, Collins & Smith, P.C. said in a press release last week.
Rick Thompson, executive director of Michigan NORML brushed off Viridis’ comments, saying that whenever someone finds themselves penalized by government, they immediately say, government is picking on them.
“I think the lawsuit Viridis filed against the regulatory agency itself, gives us a lot of clues as to how flimsy their case is,” Thompson told Grown In Tuesday evening. “They make a lot of suppositions and claims the MRA has personally been attacking them for months and months. It seems unsubstantiated.”
Meanwhile, the state’s largest cannabis trade association says it has no opinion on the matter.
“Our time has been spent working with our members and making sure their samples are getting picked up in a timely manner and that they understand the recall, that things that may have been initially placed on hold are coming off of hold. And so, our role in all of this, really is not to have an opinion,” said Robin Schneider, executive director of the Michigan Cannabis Industry Association, an organization representing 300 cannabis businesses, including laboratories.
The lawsuit makes a laundry list of complaints, including one that “the MRA problematically” involved Viridis’ competitors in its investigation and refused calls that an independent third-party should be deployed.”
“The state doesn’t have a lab. They could theoretically use the state’s crime lab, but this is not criminal. This is regulatory administrative law and how else are they going to verify this?…I think that’s just whining on Viridis’ part,” said Michigan cannabis attorney Matthew Abel, who dismissed the claim.
The lawsuit also states the MRA knew the results of the competitors’ audit tests three weeks before issuing the recall, “raising real questions about the validity and urgency of the alleged public health risk.”
Viridis also claims multiple respected national experts contacted the MRA informing them the recall was “unwarranted” and that the MRA’s rationale was “flawed.” The MRA, the complaint states, still proceeded with the recall.
The retaliation, Thompson said, was from Viridis.
“Without any hard evidence against this, emails saying let’s go get these guys, it’s impossible to prove any of this in court,” Thompson. I think if you look at how quickly after the charges came out that this lawsuit was filed, you see that it’s a defensive, retaliatory move.”
Meanwhile, Viridis has been drawing support from the business community and state elected officials.
Just before Thanksgiving, Michigan State Sen. Aric Nesbitt sent a letter to MRA Executive Director Andrew Brisbo seeking more information about the Nov. 17 statewide product recall.
“The Marijuana Regulatory Agency’s recent recall of nearly 65,000 pounds of cannabis has caused a great deal of concern across the industry. While I appreciate and share your interest in protecting the health and safety of all consumers, I am concerned by some of the things I have heard about how this recall was conducted,” wrote Nesbitt, (R-Lawton).
The Michigan Chamber of Commerce also filed an amicus brief on behalf of Viridis.
“The Michigan Chamber is deeply concerned about the impact of what appears to be an extreme and unconstitutional government overreach by the MRA. The MRA’s failure to abide by clear legal tenets not only jeopardizes the plaintiffs’ business and its employees’ livelihoods, but also sets a dangerous precedent for the entire business community,” said Rich Studley, president and CEO of the Michigan Chamber.
Michigan NORML leader Thompson claims it’s not surprising the Chamber would come down on the side of business rather than on the side of government.
“But if you look at all the agencies that support patients and consumer groups, I think you’ll find that we’re in favor of the recall out of the safety of public welfare,” Thompson said. “When you look at the lawsuit, it clearly shows there were 6 out of 8 tests that were redone by other labs that failed over microbial contamination. That, in itself, is enough to warrant a recall.”
Dr. Lev Spivak-Birndorf, chief science officer with PSI Labs, a Viridis competitor in Michigan, told Grown In there are few standard guidelines on acceptable contaminants levels as well as few valid ways to test for contaminants.
One standards-setting organization, AOAC International, created new standards, and in August, Michigan labs were required to update their microbiological testing methodology to meet specific standards laid out by AOAC.
The testing side of the cannabis industry is unusual in the way it is run, he said.
“There isn’t a whole lot of distance sometimes between the regulators who are kind of keeping an eye on labs and the people who are producing the product,” Spivak-Birndorf said in a previous interview. “It’s an industry that’s been known to be fraught with inaccurate data that’s favorable to the clients. So, I think it’s great work by the Marijuana Regulatory Agency to step up on enforcement and really make sure that labs are following procedures.”