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Marijuana Industry News October 9, 2019 MJ Shareholders
On Oct. 4, Leafly reporter David Downs published an article that outlined how an anonymous tip prompted California Department of Consumer Affairs investigators to raid a warehouse in Canoga Park (northwest of Los Angeles) and seize millions of dollars’ worth of untested, illicit vape products and edibles that were allegedly manufactured by Kushy Punch.
What state investigators found in Canoga Park was an apparently unlicensed cannabis business manufacturing and distributing vape cartridges and other concentrate products. Investigators took photographs of extraction equipment and “thousands” of vape cartridges, according to Downs. The unlicensed vape cartridges were packaged with Kushy Vape-branded materials.
Kushy Punch holds manufacturing and distribution licenses in California, with each one registered to a Marina Del Rey address—about an hour south of the Canoga Park warehouse.
Alex Traverso, Assistant Chief of Communications for California’s Bureau of Cannabis Control, confirmed that the investigation is ongoing and declined further comment.
Messages left with a Kushy Punch employee were not returned.
The news comes in the midst of a national public safety debate over vape products of all stripes. The Centers for Disease Control and Prevention report more than 1,000 cases of vaping-related pulmonary illnesses and 18 deaths (as of Oct. 7). Much of the scrutiny has targeted illicit-market cannabis vape products, which in some cases have been proven to include vitamin E acetate as a thinning agent.
Governors of three U.S. states—Massachusetts, Washington and Oregon—have gone on to request outright bans on all vape sales. (Washington’s vape ban has yet to be approved.)
On Sept. 11, California Assemblyman Tom Lackey (R-Palmdale) introduced legislation “demanding more stringent quality control and testing practices for cannabis products.”
Responses continue to evolve within the licensed cannabis industry, and yet questions remain about what, precisely, is causing these illnesses. If many of them are originating in the illicit market, as investigations thus far have insisted, then it becomes a significant challenge to pinpoint what sort of chemical constituents may be involved. The licensed cannabis market has testing regulations in place to prevent just such an outbreak.
But even as the state-legal industry further hones its testing regulations, consumer demand and a host of other economic and political factors have allowed an illicit market to thrive. Recent reports suggest that a majority of California consumer spending on cannabis remains off the books in the illicit market—and will continue to do so through at least 2024.
As recently as Oct. 3, Kushy Punch CEO Ruben Cross was quoted by Green Entrepreneur in a news article about counterfeit vape products flooding the illicit marketplace. “We have changed our packaging six times in the last two years to make our products look different,” Cross said. “It has cost our company well into the millions trying to stay one step ahead of the fake Kushy.”
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