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Missouri Regulators And Marijuana Company To Face Off Over Product Recall At Administrative Hearing



The main questions addressed on Friday will be: Was there a credible threat to public health? And should Delta’s suspension be lifted now that potentially dangerous products are pulled from the shelves?

By Rebecca Rivas, Missouri Independent

Recalls on cannabis products have become common in other states where marijuana is legal.

But when Missouri regulators issued their first recall last month, veterans of the industry were surprised. While recalls most commonly involve a company cooperating with regulators to understand the issue—was there bacteria in the product, or perhaps a wrong label—that was not the case in Missouri.

Products were immediately pulled from the shelves, and the manufacturer’s operations were suspended, as the state alleged “inversion”—illegally importing marijuana or converted hemp products into the state.

On Friday, the saga comes to a head, with the state and marijuana manufacturer Delta Extraction facing off before the Administrative Hearing Commission over whether Missouri overstepped its authority.

According to commission officials, a decision won’t be made until after a transcript of Friday’s hearing is available, which can take up to 30 days. Both parties will have an opportunity to submit briefs, and then the commission will issue a ruling.

Marijuana dispensaries and warehouses across Missouri are holding on to more than 62,000 recalled products in special vaults.

Lisa Cox, spokeswoman for the Missouri Department of Health and Senior Services, which regulates the state’s cannabis program, said the products are being held “until the department determines the product is safe, may be remediated or must be destroyed.”

What typically happens in a recall

During Delta’s appeal process, the Missouri Division of Cannabis Regulation has said regulators learned about the company’s activities—that it was adding out-of-state hemp-derived THC to marijuana products—through an anonymous tip.

How they verified its credibility was through the software the state uses to track information about marijuana products, called Metrc.

From the moment the marijuana plant starts to sprout, it gets a tag that goes into Metrc, and that plant’s yield is tracked until it finds its way into a vape pen or joint.

Because marijuana products are so closely tracked in Metrc at various stages of production, a “traceability” recall like this is pretty rare, said Matt Regusci, technical director of the St. Louis-based Cannabis Safety & Quality, an accredited cannabis certification program.

“Typically companies are just following the rules because they don’t want to lose their product,” he said. “This is usually very spelled out in each state’s regulations on how they’re tracking it from seed to sale.”

Traceability issues are usually “one-off cases,” he said, as a result of human error—because an employee typed in the wrong weight or amount into the system.

But it’s normally not the reason for a “huge recall like this,” he said.

“It’s kind of up there with white-collar crime,” Regusci said. “It’s very difficult to catch, without some sort of whistleblower saying that something’s going on.”

Delta Extraction filed a lawsuit against the state in an attempt to stop the recall. A Missouri judge dismissed the case, ruling that the Administrative Hearing Commission needed to finish its process before the court intervenes.

“Lawsuits do happen,” Regusci said, regarding recalls. “Particularly in an industry like this, where everybody’s kind of new to it… As more of these entities start figuring out more of what they need to do on both sides, we’re going to see less and less lawsuits.”

Another notable difference in this situation was that the state immediately suspended the company’s license, which experts say is not typical.

“It’s rare for the state to issue a suspension order on the front end of things,” said attorney Clark Wu, an Arizona-based who specializes in hemp and cannabis law. “Normally what happens in other states in the recall process is the state will issue some form of what’s called a deficiency notice.”

What’s on the table

On Friday, the commissioner will be looking into both state’s authority to issue the immediate suspension of the company’s operations and the recall.

The company, Delta Extraction, is a Robertsville-based licensed marijuana manufacturer that specializes in making THC distillate, a highly potent and pure form of THC used for things like vape pens, infused pre-rolled joints and edibles.

On August 2, the state regulating agency suspended Delta Extraction’s operations after accusing the company of sourcing untested “marijuana or converted hemp from outside of a Missouri licensed cultivation facility.”

And the state issued a product recall on August 14.

According to the commission, the main questions addressed on Friday will be: Was there a credible threat to public health? And should Delta’s suspension be lifted now that potentially dangerous products are pulled from the shelves? And is the investigation as it relates to a credible and imminent threat to public health or safety still ongoing?

By law, the only way the state can issue an immediate suspension—rather than give 30 days notice—is a threat to public health or safety.

Carole Iles of the Administrative Hearing Commission addressed this in her preliminary order on August 29, denying a stay of Delta’s suspension.

Iles wrote that the state constitution allows for immediate suspension of operations by a marijuana licensee “in instances where there is a credible and imminent threat to public health or public safety.”

And according to the state’s cannabis regulations, a threat could include a situation where the product wasn’t “compliantly tested” or “a credible report, such as from law enforcement, that diversion or inversion of marijuana product is occurring at the licensed facility.”

The state’s rules don’t define “inversion,” Iles said, but a state regulator gave an acceptable definition in testimony—that it occurs when cannabis seeds, plants or products made from them come into the regulatory market from outside the system. This includes when “hemp-derived chemically modified ‘converted’ cannabinoids” are added to products, she said.

Iles also stated in her order that the information about a possible threat was credible because Metrc reports verified that, “Delta was incorporating hemp-derived tetrahydrocannabinol into its marijuana products in violation of emergency rule.”

The emergency rule was in effect from February 3 until the final rule took effect on July 30.

“The regulation prohibited manufacturers from including in their products any THC produced by the conversion of THC-A or CBD from any source other than marijuana grown in Missouri by a Missouri-licensed cultivator,” Iles said in her order. “The use of THC produced from THC-A or CBD from industrial hemp plants was prohibited.”

This story was first published by Missouri Independent.

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Photo by Kyle Jaeger.

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