Michigan blocks sale of marijuana products worth millions without explanation

LANSING, MI — Troy Boquette, the general manager of Freddie’s Joint, a marijuana shop in Clio, arrived to work Friday, April 15, to learn the THC-infused blue-raspberry gummies his store bought the day prior were placed on hold by the state licensing agency.

By noon, other flavors were added to the list. The gummies came from a licensed marijuana processor named Sky Labs in Mount Morris, a company that specializes in making edibles. As he was speaking to an MLive reporter, Boquette noticed additional vaping products sold under a brand sometimes produced by Sky Labs, had also been placed on hold by the Cannabis Regulatory Agency, formerly the Marijuana Regulatory Agency, renamed by executive order this week.

“This is not something that we would even be able to comment on,” Cannabis Regulators Agency (CRA) spokesman David Harns said when contacted by phone Friday. “We can’t acknowledge or confirm an investigation” is underway. “I can’t discuss this topic with you.”

Attorney Denise-Policella, who represents Sky Labs, said the hold was placed on all of the business’s products, worth in excess of $5 million, without explanation about 4 p.m. Thursday, April 14.

“At 4 p.m. they received a call from a client and literally all of their product started going on administrative hold,” Policella said. The CRA “said it’s related to an investigation. It does not appear to be a public health or safety matter, but I’m speculating, because they didn’t issue a recall.”

When the CRA places a product on hold, it theoretically prohibits transfer and sales; however, Boquette said his point-of-sale system doesn’t automatically flag sales of marijuana that is on hold in the statewide monitoring system. His employees perform daily checks on inventory to determine product is safe and clear for sale. If products are placed on hold during the business day, he said it’s possible they could be missed and sold to customers.

Boquette doesn’t know why the marijuana products in question are on hold.

Edibles and vaping products are manufactured using THC oil concentrates, which typically presents fewer health safety risks, since it’s separated from the living plant material that’s more easily contaminated. The process used to extract THC does require use of potentially toxic solvents, like ethanol, benzene and acetone, that, if not removed properly, may pose a risk to consumers.

However, licensed safety labs already tested samples of the on-hold products for the presence of solvents, Boquette said. “It had to have passed state testing to have made it to us.”

Policella said the products that were placed on hold at Sky Labs all seem to originate from the same licensed marijuana grower and includes product that’s passed testing and been shipped to retailers across Michigan. Due to attorney-client privilege, she wouldn’t release the grow facility’s name.

Policella believes this administrative hold, and unknown others like it that occur regularly throughout the industry, equate to an unconstitutional seizures without an opportunity for due process.

“They do these for months and months and months at a time,” she said. Sky Labs previously had a batch of product placed on hold by the CRA for 13 months, “and we still don’t know why.”

Policella speculated that the reluctance of the CRA to issue a formal recall on the product may stem from a recent court battle in which a Court of Claims judge questioned some of the CRA’s actions leading up to the largest ever recall in Michigan last November.

“The (CRA) is welcome to investigate whatever they would like,” she said. “It is my opinion that the (CRA) does not have the authority — and should not have the authority — to deprive companies of their product. It has the ability to drive people out of business and blame it on … an ongoing investigation that they’re not required to tell us the details of.”

Sky Lab was fined $20,000 in 2021 for underreporting vaping cartridges it manufactured, which led to product being sold to consumers without undergoing full safety testing. Sky Labs claimed the underreporting was due to a data entry error.

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