Oklahoma Launches Cannabis Crackdown, Revokes Farm License

At least 70 applications and renewals are currently under review due to suspected fraud.

The Oklahoma Medical Marijuana Authority has begun what could be a lengthy crusade to rid its state cannabis industry of bad actors, and the crackdown began with the revocation of a cultivation permit the state said was in violation of the Oklahoma residency requirement.

An administrative law judge ruled on March 15 that Sun Light Farm was out of compliance with state laws governing the MMJ industry, specifically a requirement that at least one local must own at least 75% of each cannabis company. The judge also said the farm had “submitted fraudulent ownership information” in its license renewal application last year, according to a press release.

The true owners of Sun Light Farm were two nonresidents, apparently Chinese nationals, who were poised to buy out the “straw” owner after the other two – Caixang Yang and Chong Her – obtained Oklahoma residency, Law360 reported.

The court order allowing the OMMA to revoke Sun Light Farm’s license makes no reference to the nationalities of Yang or Her, but Oklahoma Gov. Kevin Stitt appeared to link the grow operation to the nation of China.

“Drug cartels, organized crime, and foreign nationals working for the Chinese Communist Party have no place in Oklahoma, and we will continue to do everything we can to bring these bad actors to justice,” Stitt said.

An attorney for Sun Light Farm, Joshua Smith, told Law360 that the judge had not found any incidents of wrongdoing, but that the ruling was the company’s business arrangement didn’t meet the legal parameters of the residency requirement.

Stitt’s comments in the OMMA announcement came the same day as a story in Politico reported a steep increase in links between China and illegal cannabis grows in the U.S., including in Oklahoma. Upwards of 3,000 licensed cannabis farms in that state have been “flagged for suspicious activity” – and 2,000 of those farms have some connection to China, “supplying workers, funding, or both,” Politico reported.

That means the Sun Light Farm case could be the first of many.

The OMMA is currently reviewing at least 70 license applications and renewals that are suspected of similar fraud, it said in the release.

“We’re just getting started,” OMMA Executive Director Adria Berry said. “There are dozens of other cases of suspected fraudulent ownership that we’re reviewing right now. This won’t be the last time we take action on someone trying to harm Oklahomans through illegal business practices.”

Residency requirements, however, have broadly been under attack in the U.S. cannabis industry, with one in Maine thrown out by a court case last year and others being litigated in New York and California. A federal judge did uphold the residency requirement in Washington state, however, so from a constitutional perspective, such laws are still an unsettled question.

John Schroyer

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