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Washington State Prepares To Rewrite Marijuana Testing And Packaging Rules

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Marijuana regulators in Washington State will entertain sweeping changes to how marijuana is tested, processed, packaged and sold in one of the U.S.’s oldest recreational marijuana markets, officials announced late Wednesday.

Recreational cannabis has been sold in regulated retail outlets in Washington since 2014. Consumers there pay one of the country’s highest tax burdens, generating nearly $400 million in revenue through the first three years of legalization, as the Stranger reported in late 2017.

But medical marijuana patients have long complained about limited product availability. And a recent string of testing labs suspended for erratic results that allowed unsafe product to reach retail shelves has shaken confidence in product safety.

“Requests from the industry have…been received regarding testing requirements, and changes in testing requirements in other states have prompted further review of WSLCB rules for potential adjustment,” the new notice from the Washington State Liquor and Cannabis Board said. “Additionally, the WSLCB has heard from the medical marijuana patient community that they would like to see additional product types or levels of potency that are not currently supported by the regulatory structure.”

“For these reasons, changes to products, serving amounts in packaging, and other related requirements may be considered,” the regulators announced Wednesday.

Wednesday evening’s notice is the initial notification of potential rulemaking, and “no rule language is offered at this stage of the process.”

Members of the public can submit comments or proposals until October 24. No proposed rules changes are expected to be filed until “on or after October 31,” the notice said.

“Following the comment period, the agency will send out and publish the proposed rules, establish a comment period on the proposed rules, and hold a public hearing before the rules are adopted,” according to the agency.

Until then, the agency “will consider the following topics for potential rulemaking changes,” according to Wednesday’s notice:

  • Lot and batch sizes;
  • Fields of testing and pass/fail level adjustments;
  • Potency testing requirements;
  • Pesticide testing requirements for all cannabis products;
  • Heavy metals testing requirements;
  • Sample deduction requirements;
  • General testing rule adjustments;
  • Product, THC serving limits, and packaging requirements; and
  • “Other related rule changes that may be necessary or advisable,” according to the notice.

Whatever “further adjustments” the agency will propose are meant to “increase efficiencies in testing” and “increase the availability of compliant [cannabis] products,” the notice said.

Anyone interested in submitting comments or proposed rules can contact Joanna Eide, Policy and Rules Coordinator, at [email protected].

Marijuana Moment is made possible with support from readers. If you rely on our cannabis advocacy journalism to stay informed, please consider a monthly Patreon pledge.

Chris Roberts is a reporter and writer based in San Francisco. He has covered the cannabis industry since 2009, with bylines in the Guardian, Deadspin, Leafly News, The Observer, The Verge, Curbed, Cannabis Now, SF Weekly and others.

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Cannabis Investors Involved In Shady Coronavirus Mask Deals, Industry Insider Claims

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Contracts, emails and spreadsheets that Juanita and Dawn Ramos shared with ProPublica detail how domestic and foreign investors, many with marijuana industry ties, seized upon the nation’s public health disaster.

By J. David McSwane, ProPublica

In late April, as an escalating pandemic shut down most of the country and the federal government shelled out billions of dollars to untested contractors for protective masks, Juanita Ramos got a call from a friend in the marijuana business.

Her friend and some other ganjapreneurs were buzzing over a potentially huge payday. They had in their possession a $34.5 million purchase order from the U.S. Department of Veterans Affairs. A contractor hired by the VA to provide 6 million N95 respirators to the nation’s largest hospital system had searched for weeks but found none of the potentially life-saving masks. So he had reached out far and wide for help, offering to cut in anyone who could help him finance, purchase and deliver masks by his deadline.

His PO, as it’s commonly called, had made its way to players in the cannabis industry, where deals are made quickly and often in cash. The friend asked Ramos: Did she want in on the action?

Ramos had modest connections in the medical supply chain through her work in legal marijuana and thought perhaps she could help terrified health care workers get urgently needed protective gear while also pocketing a little extra cash. Ramos, 66, enlisted her daughter, Dawn, 50, and both hit the phones, calling moneyed folks they knew in the marijuana business.

Marijuana retailers, operating in the no man’s land between state legalization and conflicting federal law, often get financing outside of traditional banks from private-equity firms and wealthy individuals. A famous example from The Before Time: Last fall, two indicted Soviet-born businessmen working for President Donald Trump’s personal attorney, Rudy Giuliani, tried to finance a pot business with cash from a Russian investor.

In the marijuana space, Ramos thought, there are people with deep pockets who can move money around fast, avoiding the hang-ups that might slow such an urgent purchase.

“It’s quick money,” Ramos told ProPublica. “And the broker game in the marijuana and industrial hemp industry — it’s exactly the same.”

For working the phones, Ramos and her daughter said they only made about $200, but their experience and the records they kept tell a cautionary tale for hospitals, agencies and schools that are still scrounging for masks ahead of a potential second wave of coronavirus.

Contracts, emails and spreadsheets that Juanita and Dawn Ramos shared with ProPublica detail how domestic and foreign investors, many with marijuana industry ties, have seized upon the nation’s public health disaster.

They show that some brokers attempted to use forged documents to gain access to masks coming off production lines of 3M, the manufacturer that makes the gold-standard masks capable of filtering 95% of particles that could transmit the novel coronavirus.

In one exchange, the owner of a Swiss nutritional supplement company detailed his plan to buy millions of 3M masks at $3.71 apiece and resell them to the Federal Emergency Management Agency, whose purchase order priced masks at $7 each.

The emails include bogus U.S. Food and Drug Administration certifications; videos and photos of real or imaginary mask stockpiles; bank statements claiming to reflect billions of dollars that could be wired instantly; and, of course, nondisclosure agreements to keep participants quiet.

These coronavirus-era artifacts were collected by a self-described medicine woman who lives with her daughter in Austin, Texas. It took only a few months for her to grow disgusted with what she saw in the rogue personal protective equipment market and decide to tell her story.

The Mystery Woman

I had first heard of Juanita Ramos back in April as I reported the other side of the VA deal.

I had accompanied VA contractor Robert Stewart Jr. on a private plane to Chicago, where he promised I could watch him deliver medical-grade masks to a VA warehouse. But the reporting trip yielded something different: a close-up look at the frenzy the federal government created when it agreed to pay obscene prices for masks to just about anyone claiming they could deliver. The only procurement I witnessed that day was of McDonald’s fast food.

Several times as his deal fell apart, Stewart cryptically referred to Ramos, whom he’d met on a phone call with various mask brokers. He believed Ramos had a connection to Vice President Mike Pence, the head of the federal coronavirus task force, and was greasing the wheels to help Stewart get a contract extension.

He didn’t have a number for this mythical Ramos, and I had turned up nothing about her on deadline. Ramos remained a mystery after the story ran, but a non-journalist friend of mine texted what I thought was a random joke about a nonexistent person: “Juanita Ramos is either a stripper in Atlanta or a Native American medicine woman.”

Ramos had a common name, and I was pre-filtering based on what little I knew, scouring LinkedIn and other databases for someone with Washington connections. But my friend, Crizno (don’t ask), had gone down a random late-night Google hole and found a photo of Ramos holding a dead eagle, bestowed upon her by a Cherokee Nation chief when she completed spiritual medicine training.

Weeks later, I finally contacted the correct Ramos and shared my story of Stewart’s unsuccessful VA deal. I told her he believed she was a conduit to the vice president.

“I’m reading this and I’m like holy hell — what?” she said as she saw the article for the first time. “First off, I don’t even like Mike Pence.”

Ramos insisted she has no White House connections.

“I help write legislation for medical marijuana,” she explained, referring to her work with the Utah Association for Responsible Cannabis Legislation and Sacred Roots Healing, an educational group that helped skeptics accept that non-THC cannabis products don’t make children with autism, like, super high. She’d also worked for a major CBD company in Colorado, the first state to legalize recreational pot.

“I mean, I’m down for the farmer. And believe me, Mike Pence ain’t gonna do shit for the marijuana industry or the farmer.”

“I don’t know how I became the mystery woman,” she quipped, “But this was a great ha-ha.”

It was true, as Stewart said, that she had joined a call with him and Troy King, a former attorney general of Alabama who had apparently become a mask broker. In the final hours before the VA axed Stewart’s contract, King had been helping him track down potential mask sellers and financiers.

“I said, lookit, I will do what I can to contact people that may have access to masks, but I don’t know if it can happen,” she explained, but that was the extent of her role. In retrospect, she’s not sure why she was even on the call. She said she had no connections, no masks, no funding. She complained that after that phone call, she was inundated with offers from mask brokers, which sometimes included client needs lists and “proof of life” videos of secret stockpiles of masks.

“I’m getting emails from these guys saying, lookit, I have 10 million masks or I have, you know, gloves, or we have what was the other thing? Gowns. Let us know if you need any. And I’m like, I don’t want anything to do with these guys.”

I asked her to send me examples of the emails she had collected. She forwarded an April 25 purchase order that suggests King had planned to flip the masks, buying them from a foreign seller and reselling them to Stewart, who would then sell them to the VA. In mask trade parlance it was a “broker chain,” wherein inventory switches ownership multiple times until the end buyer, in this case the VA, pays a price high enough for everyone to get a cut. Once the buyer pays up, money drips down.

That purchase order, included in an email thread with brokers I’ve independently found to be involved in the deal, suggested King, through his limited liability company, intended to buy the VA’s would-be masks from JV Tock Trading Corp., a Canadian distributor.

Chris Kruger, a managing partner at JV Tock, said the company got a call from King and other brokers just hours before the VA deal was about to implode.

The company execs were asked “if we could try and help them save their purchase order that they’re about to lose.”

Kruger said JV Tock got a call the next day saying that “the attorney general’s gonna pull some strings to help them out.”

The company decided not to work with King and was unaware of the purchase order, Kruger said. His company is on the up and up, he said, and hasn’t made much money in its efforts to get more masks to Canadian and U.S. buyers, which have led to countless dead ends.

“The entire industry is one of the most frustrating headaches I have ever dealt with,” he said. “Greed and dishonesty run rampant.”

Through a spokeswoman, King denied any involvement with JV Tock.

“The document you attached to your email is not one of my company’s purchase orders,” his statement said.

Three days later, a different purchase order showed another broker in Arizona offering to buy millions of the same type of 3M masks for $3 apiece from — wait for it — another broker. At the time, 3M’s list price was about $1.27. The VA, however, had agreed to pay about $5.75 apiece, a 350% percent markup, which left plenty of profit for a successful broker chain.

I wanted to see more. So I flew down to Texas at a critical moment in the state’s struggle with COVID-19. Hospitals were near capacity because of an explosion of new infections following Gov. Greg Abbott’s mixed signaling on the importance and enforcement of wearing masks.

“Blood Money”

Ramos lives in Circle C Ranch, a master-planned maze of cedar trees and stone facades southwest of downtown Austin, where residents enjoy a golf course and an Olympic-size pool that is, inexplicably, heated.

She’s definitely not the shrewd, White House-connected capitalist I had been led to expect. She refers to her higher being as “creator” and places colorful stones at the bottom of all sinks so that when you wash your hands, bad energy washes off and returns to the earth.

From her brown leather sectional, Ramos outlined her dream of helping people while making a modest profit, and how it was scuttled by bogus documents, misinformation and greed.

“I told my daughter, ‘Hey, if we were to look at doing this, we would do like maybe a penny or 2 cents,’” she said, referring to the potential profit margin on each mask.

The plan fell apart when friends in the marijuana industry connected her to Drew O’Malley of Boston Capital Consultants, Ramos said. Emails and records show O’Malley, whose background is in Connecticut real estate, was trying to broker multiple high-dollar deals involving foreign investors and private-equity groups, including the VA deal with King and others.

Ramos said her alarming conversations with Boston Capital Consultants eventually led her to sever ties.

“This Drew guy was telling me that they put, like, $1.25 on top of a mask,” Ramos alleged. “And I’m like: ‘What are you talking about? People are dying, and you guys are ripping people off for a buck twenty five?’ It’s like broker-broker-broker-broker for, like, 15 people in the middle, right? And then that dollar mask turns into eight bucks, or seven bucks or whatever.”

“I don’t want to get caught up in the ripping people off,” she added. “That’s blood money to me.”

Emails Ramos shared show O’Malley passed along a few letters of intent, commonly referred to as LOIs, in which prospective buyers outline how much they’ll pay for masks that are either sitting in a warehouse or on a manufacturer’s production line.

On April 29, Ramos received an LOI showing that a Zurich investor named Stephan Schmid, who runs a dietary supplement company, hoped to buy 100 million N95 respirators a week from 3M at $3.71 each. The end buyers for the deal included FEMA and hospitals.

This happened at the same time King and Stewart were trying to sell the same type of masks to FEMA at $7 apiece. Like the VA deal, the FEMA arrangement was ultimately nixed.

Schmid didn’t respond to questions.

O’Malley, who didn’t return calls and emails, is no longer employed by Boston Capital Consultants, according to his former boss, Aaron Marcy Sells.

Sells founded Boston Capital Consultants in 2018 after a career that involved marketing work for New England Patriots owner Robert Kraft, real estate investing through firms branded with his initials, launching bars and liquor brands and, more recently, trading through AMSCAN Inc., a holding company for cannabis ventures.

“They’re all big marijuana guys,” Ramos said.

Sells claims to have played no part in his company’s well-documented negotiations in the PPE trade. “If you asked me under oath what happened, I couldn’t tell you,” Sells told ProPublica.

“I don’t think Drew did anything wrong,” he added. “I think he got pulled in with some bad people. … The minute I smelled it, I pulled everyone away from it, and Drew left the company.”

Sells insisted that he shouldn’t be named in this story. “I am not involved in this Ramos and Troy King nightmare,” he said. And while I asked him multiple times if Boston Capital Consultants was as involved in the PPE game as emails sent out by his employees suggested, he provided only opaque dismissals.

“We do a lot of different business,” he said.

Ramos’ emails show the company was soliciting masks and gowns consistently through June, including in email blasts labeled “Deal of the Day.” For instance on June 5, Boston Capital Consultants sent out an email that’s an alphabet soup of PPE trade terms.

“DEAL OF THE DAY: 5.87 million KN95 Masks (FDA) – .95 cents per mask on the ground in L.A. PO/POF gets POL …”

KN95s are the Chinese version of the N95. The PO is a purchase order from a hospital or government agency. A POF is a proof of funds, such as a bank statement or letter of assurance from a bank. POL is proof of life — video showing the stock.

“THESE WILL MOVE FAST SO PLEASE DO SO AS WELL,” the email ends.

On July 14, Massachusetts business filings show Sells founded his latest venture: Safe and Clean Protection LLC. Its stated business purpose is to “manufacture and sell personal protective equipment (PPE).”

Three Paths to Masks

Resellers pursue three avenues to attain masks, according to interviews with brokers across the country and the dozens of emails Ramos shared.

The first is the all-cash spot buy, done fast to keep the feds from confiscating inventory.

A seller broadcasts that they have a mask lot on the ground, stashed in a warehouse or at a customs inspection hub. A potential buyer bids for the product and provides either a purchase order or bank records to show there’s money backing the deal. In return, the seller provides a proof of life. The money usually goes into an escrow account, similar to a real estate deal — released to the seller upon mask inspection.

Dawn Ramos said she saw brokers reselling inventory over and over in these spot buys just to keep it moving — technically not hoarding — so the federal government wouldn’t snatch it up. One broker “would get it and if he can’t sell it, and if it’s not gone by a certain time, they have to move it somewhere else, because otherwise it would be seized,” she said. Under the Defense Production Act, FEMA has stepped in to compel owners of mask lots to sell to the federal government at market prices if the broker is hoarding or price-gouging.

In late April, as its hospitals were inundated with COVID-19 cases, the VA’s top doctor expressed frustration that FEMA had swooped in and taken shipments the VA had ordered from vendors. FEMA has denied seizing supplies from other government branches.

The second type of deal is a direct buy from a manufacturer such as 3M. To pull this off, a purchase order must come directly from a hospital or government agency. This approach is less attractive to brokers because it requires more paperwork, oversight and the masks sell for near the list price.

The third type of deal is to purchase a production line, as the Swiss investor proposed. As one broker recently told me, “It’s basically futures trading.”

This is where the rampant fabrication comes into play. Getting a connection to a distributor or manufacturer is all but impossible right now, brokers say, and to even be heard you have to prove you have backing. Several companies, including JV Tock, have reported their brands being used in phony letters to help sell an illegitimate deal.

One exchange that dropped into the Ramoses’ emails illustrates the magical thinking pervading the mask trade.

In early May, a potentially existent English investor, using an obscure international charity, was working with a London-based consulting firm to establish that he should be a 3M distributor. His proposal included a letter purportedly from HSBC Bank reflecting more than $2 billion in available funds. The package also came with a letter of support from a California-based energy company that, he claimed, vouched for his bona fides.

Emails show this proposal floating between Boston Capital Consultants, including its owner, and Joseph Ingarra, who identifies himself as the “head rainmaker” at Apex Growth Solutions LLC, based in Palm Beach Gardens, Florida. Ingarra’s company appears to do some sort of marketing and claims to leverage the “world’s leading science of how people make choices.”

“I’m aware of a huge fckn lot 1-2B range in the UK,” Ingarra wrote to O’Malley and Sells in early May, referring to a large mask transaction.

“Get this shipped in one big shot and get paid quickly,” he said in bold letters.

But the proposed deal and documents raise questions. First, it’s coming from Florida. Second, the investor’s Delaware business address connects to a residential home valued at less than $200,000. Third, even in late April and early May, brokers say it was very unlikely such a large stock of masks, which weren’t being made in great abundance beyond pre-pandemic demand, ever existed.

Then there’s the letter vouching for the buyer on letterhead from UDECM, the California firm that designs and builds solar energy rigs primarily overseas. I sent the letter to the firm’s owner, Albert Rau, who called immediately to tell me he believes it was forged like dozens of others that he’s batted away in recent months.

“The letter is 100% fake,” he said. “We don’t know the people listed.”

Why pick his firm? Rau said he didn’t know, but early on in the pandemic, his firm was leveraging its international supply chain connections to help some nonprofits find masks. After UDECM dipped its toes into the sea of brokers, “it went viral,” he said.

“Everybody’s got documents out there being forged now,” he said.

Ingarra said he had no idea the document he shared wasn’t real.

“I have zero idea of who drafted that letter,” he said in an email. “I hope they catch the scumbag.”

“It’s Coming”

So what exactly did we learn here?

Ramos ponders the question as she scratches the ears of Sherlock and Inspector Clouseau, two old fluffy-white toy dogs whose longevity she credits to daily doses of CBD oil.

History is about to repeat itself, she said, and she hopes hospitals, schools and governments don’t waste time with middlemen and profiteers. If they must, she said they should run background checks and do more vetting.

“I want to see your business license,” Ramos said. “I want to know who your attorney is. I want to see that you have the right to represent a hospital, and show me where it’s going.”

While life has slowed for Ramos and her daughter, brokers and importers say the global mask shortage remains. Many brokers told me they’ve moved on from masks — “too much trouble” — to focus on other PPE like gloves, which are becoming harder to source and thus more expensive.

But masks remain the best safeguard for workers and hospitals praying to block a respiratory killer, and the U.S. is still largely reliant on middlemen importers and brokers who are jacking up prices.

Two hours away, in Houston, the country’s fourth-largest city, several hospitals have reached the capacity of their intensive care units to treat the sickest patients. Statewide, the number of daily infections has jumped to about 10 times the April figure.

Nationwide, the COVID-19 death toll has surpassed 150,000 people. With the pandemic nowhere near under control, schools are reopening without plans to equip teachers and staff with life-saving masks. It’s the perfect storm all over again — low supply, intense demand, money to be made.

“It’s coming,” Ramos said. “It’s going to be repeated.”

ProPublica is a Pulitzer Prize-winning investigative newsroom. Sign up for The Big Story newsletter to receive stories like this one in your inbox.

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Illinois Shatters Marijuana Sales Record With Nearly 1.3 Million Products Sold In July

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Illinois saw another record-breaking month of recreational marijuana sales in July, the state’s Department of Financial and Professional Regulation announced on Monday.

Despite the coronavirus pandemic, Illinois is reporting nearly $61 million in adult-use cannabis sales—smashing the previous record set in June of nearly $47 million. For the first time, more than one million marijuana items—1,270,063 to be precise—were purchased in a monthly reporting period.

Illinois residents accounted for $44,749,787 in cannabis sales, while out-of-state visitors purchased $16,207,193 worth of marijuana.

Via Illinois Department of Financial and Professional Regulation.

The new adult-use sales figures don’t include data about purchases made through the state’s medical cannabis program.

State officials have emphasized that while the strong sales trend is positive economic news, they’re primarily interested in using tax revenue to reinvest in communities most impacted by the drug war. Illinois brought in $52 million in cannabis tax revenue in the first six months since retail sales started in January, the state announced last month, 25 percent of which will go toward a social equity program.

In May, the state also announced that it was making available $31.5 million in restorative justice grants funded by marijuana tax revenue.

The out-of-state sales data seems to support Gov. J.B. Pritzker’s (D) prediction during his State of the State address in January that cannabis tourism would bolster the state’s coffers.

Prior to implementation, the pardoned more than 11,000 people with prior marijuana convictions.

Over in Oregon, officials have been witnessing a similar sales trend amid the global health crisis. Data released in May showed sales of adult-use cannabis products were up 60 percent.

Louisiana Law Allowing Medical Marijuana For Any Debilitating Condition To Take Effect

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Illinois Saw Record-Breaking Marijuana Sales In June, Including From Out-Of-State Visitors

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In the middle of a global pandemic and one of the worst unemployment crises in American history, Illinois marijuana retailers saw their busiest month on record in June, racking up more than $47.6 million in total sales.

No matter how you slice the data, released by the state on Tuesday, recreational cannabis sales last month shattered existing records in the state, which began legal sales to adults on January 1 of this year. Stores in Illinois sold nearly a million (994,545) cannabis items in June—5,000 more than any previous month—and brought in record sums from in-state residents ($35.3 million) and out-of-state visitors ($12.4 million) alike.

Illinois marijuana sales by month

Illinois Department of Financial and Professional Regulation

Tax figures are set to be released later this month by the state Department of Revenue. Until then, they’re difficult to accurately estimate. Unlike many other states to have legalized cannabis, Illinois collects different tax rates based on product type and potency. Local jurisdictions can also impose taxes of their own.

While some might be surprised to see such high sales figures in the midst of a global pandemic, the strong sales month is hardly an isolated incident. Sales in May also set new records after a relatively slow March and April. Prior to May, the top sales month was January, when stores first opened. On the inaugural day of legal sales, this past New Year’s Day, customers bought more than $3.1 million worth of products.

Oregon, which began commercial sales to adults in 2015, has also seen record cannabis sales this year amid the coronavirus pandemic. Relative to 2019, an unusual spike in sales came in March, which officials attribute to consumers stocking up on products as stay-at-home orders took effect. Oregon then saw a record-high sales month in April, the first full month under the coronavirus lock lockdown, boosted in particular by sales around April 20.

Oregon marijuana sales during COVID-19

But while Oregon analysts expect the strong sales to continue awhile longer, they warned this spring of a coming downturn as COVID-19’s consequences—on both Oregon’s population and its economy—work to diminish consumer demand and purchasing power.

“Expectations are that some of these increases are due to temporary factors like the one-time household recovery rebates, expanded unemployment insurance benefits, and the shelter in place style policies,” the state’s Office of Economic Analysis said in a May report. “As the impact of these programs fade in the months ahead, and bars and restaurants reopen to a larger degree, marijuana sales are expected to mellow.”

For states, the busy cannabis sales have brought in record tax revenue at a time when many cities and states need it most. As the Chicago Daily Herald reports, state sales taxes are off by more than $181 million compared to the 2019 fiscal year. Also down are hotel taxes ($64 million), automobile taxes ($7 million) and public utility taxes ($64 million).

While Illinois cannabis tax revenue for June has yet to be reported, it’s likely that amount will also set a record given its close relationship to total sales.

The state has consistently brought in tens of millions of dollars from legal marijuana sales each month since sales launched. Per state policy, 35 percent of that money goes to the state’s general fund, 25 percent goes to aid communities disproportionately affected by the war on drugs, 20 percent goes to substance use treatment and mental health programs and 10 percent goes toward the state’s bill backlog.

In May, Illinois officials announced they would use $31.5 million of marijuana tax revenue to fund restorative justice grants to communities harmed by the drug war. “Equity is one of the administration’s core values,” said Lt. Gov. Juliana Stratton (D), who made one of the state’s first legal cannabis purchases, “and we are ensuring that state funding reaches organizations doing critical work in neighborhoods most impacted by the war on drugs.”

Marijuana Tourism Will Boost Tax Revenue, Illinois Governor Says In State Of The State Speech

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