New York State is stepping up its efforts to address illegal cannabis sales in New York, as regulators investigate several top cannabis brands tied to the illicit marijuana trade in New York. The inquiry follows reports alleging that these companies may have supplied marijuana to licensed dispensaries through unauthorised sources or out-of-state growers, actions that violate state regulations.

Since February, the Office of Cannabis Management (OCM) has been conducting an in-depth investigation into multiple companies, including Stiiizy, the best-selling cannabis brand in the United States. Authorities are trying to determine if these brands have been “laundering” cannabis through Omnium Canna, a New York-based processor. This week, OCM inspectors carried out unannounced audits at Omnium’s Long Island facilities, marking a significant turn in the case.

Alleged Illegal Practices Fueling the Market

At the center of the investigation are accusations of “inversion,” an industry term used to describe sourcing marijuana from cheaper or unregulated markets outside the state. Such practices not only harm licensed growers in New York, who are struggling with excess supply, but also compromise the state’s promise to provide rigorously tested, locally grown cannabis to consumers. Without strict compliance with regulatory protocols, there’s an increased risk of contaminated products making their way into dispensaries.

Further complicating the matter is a whistle-blower report detailing discrepancies in product testing and packaging. These allegations raise serious concerns about whether some companies are adhering to New York’s strict cannabis safety and transparency standards. The report also questions how certain brands have managed to produce large quantities of edibles, vapes, and pre-rolled joints despite the limited supply of legal cannabis flower and concentrates in the state.

Challenges for Legal Cannabis Businesses

The growing issue of illegal cannabis sales in New York sheds light on the challenges facing the state’s new marijuana industry. Experts and watchdog groups have repeatedly warned that the illicit marijuana trade in New York negatively impacts legitimate businesses while eroding consumer confidence in the regulated market. A robust “track and trace” system, designed to monitor the entire cannabis supply chain, is being touted as the best way to combat these issues and prevent inversion.

Companies under investigation, including Omnium Canna as well as brands like Waahoo, Grön, and Mfused, emphatically deny any wrongdoing. They claim their operations are fully compliant with state regulations. Despite their assurances, the case reflects a stricter approach from the OCM, with the agency’s Trade Practices Bureau ramping up its efforts to address market manipulation and non-compliance.

Calls for Stronger Oversight

Critics argue that the state has taken too long to tackle illegal cannabis sales in New York, leaving both legal growers and consumers vulnerable. An estimated 70% of cannabis sold at licensed dispensaries may originate from unregulated sources, according to farmers’ groups. This statistic underscores the widespread nature of the problem and highlights the urgency for stronger enforcement and reform measures.

New York is at a critical juncture in its fight against the illicit marijuana trade in New York. For its cannabis market to truly thrive, the state must strike a balance between strict enforcement and support for compliant businesses. By doing so, authorities can create a safer, more reliable industry that meets the needs of both producers and consumers alike.

Source: New York Times