Minnesota State Regulators Sue Twin Cities Cannabis Retailer for Illegal Sales
The Minnesota Office of Cannabis Management (OCM) has filed a lawsuit against Zaza, a Twin Cities-based cannabis retailer, for selling illegal and non-compliant cannabis products in its stores. This is the first time the state has taken legal action against a cannabis business.
According to the lawsuit, Zaza sold products containing THC levels that were 70 to 75 times higher than the legal limit, which is 0.3% THC. The state is seeking a court order to destroy the non-compliant products at the defendant’s expense.
The OCM conducted an inspection of Zaza’s stores in September after receiving consumer complaints about illegal products. During the inspection, an employee was observed selling illegal cannabis flowers to customers, and another employee attempted to conceal the illegal products from inspectors.
The state is also accusing Zaza of hiding its illegal products from inspectors, including removing them from the store through a backdoor while an inspector was present.
Jason Tarasek, a cannabis attorney, noted that there is often a “gray market” in states where there is a delay between legalization and the opening of licensed dispensaries. However, he believes that once a regulated market is established, the gray market will eventually fade as consumers prefer to purchase products from licensed businesses that have been tested and are safe.
If the court rules in favor of the state, Zaza could be disqualified from operating a cannabis business for five years.
In the past four months, the OCM has inspected over 5% of businesses and found that just over 5% were selling illegal cannabis flowers. Since inspections began last year, regulators have destroyed over 35,000 units of non-compliant hemp-derived cannabis products valued at over $900,000.
The CEO of Nothing But Hemp, a manufacturer of hemp-derived THC products, expressed frustration and concern about the illegal sales, stating that they hurt the entire hemp industry and confuse customers.
