Cannabis Testing Lab Accuses Michigan of 'Stonewalling' Evidence Disclosure in Recall Fight

The challenge stems from a recall in 2021.

This story is republished with permission from Crain’s Detroit and written by Dustin Walsh

Michigan’s largest marijuana testing lab is continuing its legal assault on state regulators, alleging in a new motion in court that regulators are withholding evidence stemming from a 2021 recall.

Bay City-based Viridis North LLC and the Michigan Cannabis Regulatory Agency have been wrapped up in litigation for two years over the recall of products tested by the lab. The state agency alleged Viridis’ testing results on 64,000 pounds of marijuana product contained “inaccurate and/or unreliable results.” The value of the recalled product at the time was roughly $229 million.

The recall sent the industry into a brief spiral as more than 400 retailers across the state had the product on shelves. Viridis alleged the recall covered upwards of 70% of marijuana product on store shelves for recreational use.

Viridis quickly sued the CRA (then known as the Marijuana Regulatory Agency) in November 2021 over what it said was harassment and retaliation from the agency. The Michigan Court of Claims ruled in December 2021 that the CRA must lift its recall on about half of the products in question.

In May last year, the CRA filed formal complaints against Viridis, alleging the lab was inflating the THC content of products it was testing. High THC, the psychoactive ingredient in marijuana, is believed to be a driver in sales. Marijuana consumers see potency as the top indicator of quality and value, according to an article by MJBizDaily.

In October last year, a U.S. District Court judge in Grand Rapids ruled Viridis could file suit against four CRA employees, including operations director Desmond Mitchell. That suit alleges the defendants violated Viridis’ 14th Amendment rights in the recall.

The company filed a motion Thursday asking the court to compel the CRA to disclose evidence in the case.

“The CRA officials and its attorneys have fought tooth and nail to prevent relevant documents from seeing the light of day,” David Russell, Viridis’ attorney and partner at Foster, Swift, Collins & Smith PC, said in a press release. “For an agency that likes to tout transparency, the CRA officials have gone above and beyond to block Viridis and the public from a full accounting of the botched recall of 2021, so we are asking the court to step in and compel them to follow the basic rules of discovery. The flagrant and continuous stonewalling by the CRA officials begs the question: ‘What are they hiding?'”

The CRA declined to comment on the allegations.

The company alleges the CRA “weaponized its own administrative rules and processes to artificially dilute Viridis North’s market share or remove the company from the state’s cannabis testing industry altogether to give more business to its competitors.”

At the time of the recall, Viridis controlled at least 60% of the state market share on marijuana testing.

Gov. Gretchen Whitmer and both legislative bodies have proposed $4 million in funding for a state-run marijuana testing lab, which would be used to spot-check the industry’s results. The budget vote is expected next week.

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