A prominent Los Angeles-based marijuana trade group has announced that several of its board members, who run licensed L.A. cannabis shops, will boycott STIIIZY products until allegations of its founder owning several illegal dispensaries are “fully resolved.”
The United Cannabis Business Association (UCBA) posted a notice on Instagram on Wednesday after The Times story broke, with a banner that reads, “Lack of enforcement allegedly allows legal operator to play both sides in CA cannabis industry.”
The Times story reported that STIIIZY founder Tony Huang, who’s also visionary officer at parent company the Shryne Group, has ownership stakes in at least nine buildings that have been found by law enforcement to be operating as illegal dispensaries.
While Huang is still embroiled in some legal actions with municipalities over some of the locations – including an abatement lawsuit from the city of Compton – most municipal enforcement actions have settled out of court thus far. The state Department of Cannabis Control told The Times that it’s still investigating allegations against Huang, and meanwhile, STIIIZY’s state cannabis business permits remain active.
Huang has denied all wrongdoing, and has said through a spokesman that connections to illegal dispensaries are coincidental, and that he’s tried to immediately evict such operators upon learning of their sales from his buildings.
“These allegations are alarming enough that UCBA President Jerred Kiloh, along with many UCBA board members, intend to cease any further purchases of Stiiizy products for resale from their cannabis shops until these allegations are fully resolved,” the UCBA notice stated.
Kiloh added in the post, “It’s important for the industry to support operators who abide by the law.”
STIIIZY did not immediately respond to a request for comment Thursday.
Kiloh told Green Market Report that about 40 retailers thus far had signed on to be part of the boycott, and added he expects the backlash to grow through the supply chain as other licensed companies find ways to cut ties with STIIIZY.
“I’ve been talking to brands who are direct competitors of STIIIZY, who are going, ‘Holy crap, this whole time, we knew their business model wasn’t really sustainable. We thought they were just incurring debt. And now to find out they’ve been selling to the illicit market to subsidize their legal business, and that’s why we couldn’t compete against them,'” Kiloh said.
Kiloh added that The Times story basically broke what is an open secret in much of the cannabis industry already, about STIIIZY having a sizable illicit market footprint.
“We were so happy that someone else has pointed this out. We’ve been pointing it out for years,” Kiloh said. “This makes the legal industry look shitty. It makes us look like criminals.”
STIIIZY is far from the first licensed marijuana business in California to have been accused of operating in both the legal and illegal sides of the trade, particularly since it’s hard enough to turn a profit in the red-tape-heavy state that many multistate operators and brands – including Curaleaf, Trulieve, Wana Brands and others – have exited the market entirely in recent years. The tough market conditions have led many licensed companies to play both markets in order to turn a profit.
That narrative was reflected in the comments underneath the UCBA announcement, with some empathizing with STIIIZY and any legal company that also has an illicit market footprint.
“Stop it … there’s a bunch of brands, distros, cultivators etc that play both sides!” one commenter wrote.
“It’s a bold statement from an organization made up of businesses in survival mode doing what they ALL must do to survive,” wrote another.
“Why do you think everybody’s gone East Coast? Because the legal game out here is a joke,” wrote a third.