New York state cannabis regulators on Monday moved to punish a Long Island-based licensed processor and distributor that allegedly concocted a scheme to allow unlicensed product to be sold in licensed retailers across the state.
According to the state Office of Cannabis Management, Omnium Health Inc. risks monetary penalties and the loss of its permit for allegedly allowing illicit operators “an unearned backdoor” to the state’s nearly $1.8 billion legal market.
The charges unveiled against Omnium – and the proposed punishments – are the most serious yet in New York’s legal industry.
And they follow longstanding allegations, repeated recently, that inversion is rife in New York cannabis, where illicit operators moved swiftly to seize a foothold after legalization in 2021.
In a statement, Felicia A. B. Reid, OCM’s acting executive director, said the agency’s “move today ensures that regulated businesses do not exploit loopholes or take advantage to undermine legal operators who play by the rules.”
Omnium could not immediately be reached for comment.
Major punishment for alleged New York marijuana malefactor
The enforcement follows the April quarantine of $10 million worth of vaporizers, pre-rolls and other products sold under brands, including Stiiizy and mfused, that were allegedly connected to Omnium.
The decisive action was welcome news for several industry operators who have been clamoring for regulators to clamp down on inversion.
“Today’s enforcement actions reinforce a simple truth that consumer safety and market fairness must always come before profit,” said Joe Rossi, a spokesperson for the Green Standard Alliance, which released a white paper earlier this month highlighting the risk to public health posed by illicit and untested cannabis products.
According to OCM, the agency’s Trade Practices Bureau began investigating Omnium in February.
Investigators discovered that Omnium allowed unlicensed third parties to use its license and facilities in exchange for rent to launder cannabis products, such as THC isolate, into the licensed market.
There was no evidence the THC isolate discovered at Omnium’s facilities was produced within the state’s regulated system, according to OCM.
Massive New York cannabis recall could follow fines, exile from industry
OCM is seeking punishment including:
- Revocation of Omnium’s processor and distributor permits.
- “Debarment” that would prevent its principals from applying for future permits.
- An unspecified fine “related to the projected revenue” stemming from the inversion scheme.
- A potentially massive recall “of all products made by unlicensed processors” and the products’ destruction.
The charges against Omnium follow OCM’s move in September to similarly fine and bar from the industry a Long Island-based testing lab.
Lexachrom Labs tested major brands but was at the center of a subsequent recall after OCM investigators accused Lexachrom of “dry-labbing,” or falsifying results without ever performing required tests.
OCM recalled 12 lots of cannabis flower in June and July after determining Lexachrom’s testing could not be trusted.
Chris Roberts can be reached at chris.roberts@mjbizdaily.com.
