Suspended Michigan Cannabis Processor Sued by Former Customer

TAS Asset Holdings LLC was allegedly sourcing illegally grown marijuana for use in its processing.

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

Michigan suspended the marijuana licenses of processor TAS Asset Holdings LLC in late February. The Lansing-based licensee of Fwaygo Extracts, a brand for vape cartridges and concentrates, was allegedly sourcing illegally grown marijuana for use in its processing.

Shortly after it lost its ability to produce product, at least one vendor sued to get paid for product it delivered to the now shuttered processor, yet another legal ripple in an overflowing basin of financial problems in the Michigan marijuana industry.

A year ago, Troy-based integrated marijuana firm Trucenta LLC sent two shipments of marijuana product to TAS Asset to the tune of $251,704, the company alleges in a lawsuit filed in Ingham County Circuit Court on March 9. TAS had 30 days to pay for the product and failed to do so as well as never responding to Trucenta’s repeated demands for payment.

Trucenta is asking the courts to force TAS to repay the total plus legal fees.

A hearing in the case is scheduled for May 24.

The case highlights the precariousness of the industry in the midst of intense price pressure and increased enforcement by state agencies that is shaking out weaker operators, sometimes at the expense of vendors.

It’s unclear whether TAS, which only processed and repackaged product into Fwaygo-branded marijuana, has any assets that could be liquidated to cover Trucenta’s claim. Its only known location was the former Roma Bakery & Deli space on North Cedar Road in Lansing.

Trucenta, by contrast, operates two Breeze dispensaries in Hazel Park and Battle Creek, paired with its grow and processing operations. It also owns the Hot Box Social cannabis consumption lounge in Hazel Park.

An attorney for TAS declined to comment on the lawsuit.

TAS ended up in the Michigan Cannabis Regulatory Agency’s crosshairs last year when two vape cartridges, marketed under the product name Space Rocks, produced by TAS failed a spot safety compliance check despite the product passing the preliminary safety check before the raw marijuana product was shipped to TAS from the grower. Both products tested positive for Bifenthrin, a synthetic insecticide banned for use on marijuana products in Michigan.

After investigation, the CRA discovered the product used to make the Space Rocks product was not the product processed and entered into the state tracking system earmarked for the vape cartridges.

Investigators noted the “business had many areas that were dirty and cluttered and had leaking containers of various process stages of marijuana and waste” among unregulated marijuana product, according to the state. Investigators also observed “three barrels of an unknown substance that were wrapped in plastic, two black totes of an unknown substance, and several mason jars of oil.”

A representative from TAS admitted to using unregulated THCa powder, a non-psychoactive cannabinoid, in the Space Rocks product.

The investigation ended with 23 formal complaints against TAS’ medical and adult-use licenses, and the state is still working through the legal process to permanently suspend those licenses.

The license suspensions are one of several under Hanna, who promised to “crack down” on illegal marijuana entering the regulated market when he took over the job last fall.

In November 2022, the CRA suspended the medical and recreational marijuana licenses for dispensary Green Culture in Flint for selling unregulated marijuana joints.

The agency alleged the dispensary was selling pre-roll joints of the strain ACF Moonrock Acai Haze that were not tested by a regulated lab or entered into the state’s marijuana tracking system. The state alleged the untested marijuana could contain unacceptable levels of pesticides, heavy metals, mold and bacteria.

The new crackdown on illicit products comes amid plunging marijuana prices in the state.

The average retail price of an ounce of adult-use marijuana flower was $87.76 in April, compared to $323.68 per ounce in January 2021. Though prices have now risen for two consecutive months.

Nevertheless, the pricing pressure is putting further strain on the industry and at least six marijuana companies are under the control of a court-ordered receiver due to financial troubles, including one of the state’s largest operators Skymint.

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