New York investigating marijuana giant Stiiizy for possible ‘inversion,’ report says

(This story has been updated with comments from Stiiizy, Grön and Mfused.)

California-based cannabis megabrand Stiiizy is under investigation in New York for allegedly smuggling marijuana from out of state into licensed stores.

Citing two unidentified sources, The New York Times reported Monday that Stiiizy is one of “several companies” that the state’s Office of Cannabis Management is probing for possibly “laundering” product into the state via a state-licensed processor.

OCM inspectors on Monday conducted a surprise audit of the processor, Long Island-based Omnium Canna, the newspaper reported.

Other cannabis operators implicated

According to the Times, regulators are also investigating:

• Grön
• Mfused
• To the Moon
• Turn
• Waahoo (Omnium Canna’s house brand)

In emailed statements to MJBizDaily, three of the companies denied the allegations against them.

Stiiizy CEO James Kim claimed that the OCM’s audit of Omnium’s facility “found the operations to be compliant with New York laws and regulations.”

The OCM did not immediately respond to Kim’s claims.

Meanwhile, a Grön spokesperson said the Times’ “story is inaccurate” and the Oregon-based company is “not under investigation.”

An Mfused spokesperson said the Seattle-headquartered company is “… aware of recent reports suggesting an investigation by the OCM. … To be clear, we are not under investigation, nor are we aware of any such investigation.”

‘Inversion’ concerns growing

Allegations of “inversion,” the term for inserting marijuana products produced outside of regulated channels into the licensed supply chain, have been circulating in industry circles for some time.

But Stiiizy is one of the most prominent brands to date to be connected to allegations of inversion.

OCM officials have acknowledged that inversion is happening to some extent in New York.

The agency in February launched a Trade Practices Bureau specifically tasked with investigating regulatory violations that include inversion allegations.

Stiiizy is one of several prominent companies based in other states whose products have appeared on retailers’ shelves in New York, including at unlicensed stores that flourished after the state legalized adult-use marijuana in March 2021.

In some cases, it’s been unclear whether the products themselves are counterfeit or whether they were authentic products brought into the state by an unlicensed third party.

If true, the allegations that came to light Monday would be the latest headache for Los Angeles-based Stiiizy.

The company has been accused in recent lawsuits of:

• Illegal business practices.
• Marketing its popular vaporizer-oil cartridges to youth.
• Selling hemp-based products with excessive THC.