Alleged retail marijuana sales lead to state’s first lawsuit post-legalization

MINNEAPOLIS (FOX 9) - For the first time since legalization, the state of Minnesota is suing a business for allegedly selling illegal marijuana products at two locations.

What's for sale? 

Inspectors reported finding hundreds of products with a lot more THC than currently allowed.

What might be the biggest consequence is the company wouldn’t be allowed to get any kind of cannabis license when the state gets around to issuing those.

But Zaza advertises that they’re selling flower at all their locations, and when inspectors got hold of it, testing showed THC levels of more than 50 times the legal limit.

Light to black market

Most Minnesota THC businesses have been on their best behavior to erase the stigma of a black market product that’s only recently legal.
"We're all about compliance," said Steve Brown, CEO of Nothing But Hemp.

But Brown knows some of his competitors see green in crossing the lines.

Illegal sales

Minnesota made recreational marijuana legal 15 months ago, but it’s not particularly close to licensing legal retail sales.

And yet, smokers can find it for sale if they know where to look.

"We do have some customers who've come in and got really upset with us that we're not selling flower because right down the street they're selling flower," Brown said.

Mound of marijuana

Office of Cannabis Management (OCM) inspectors say in September they found more than $20,000 worth of illegal cannabis vapes, pre-rolls, and flower at the St. Paul Zaza, about a mile from Nothing But Hemp.

At the Minneapolis store, they found another $7,000 worth of vapes and flower with THC levels as high as 23%. Legal hemp shouldn’t be higher than 0.3%.

The state is now suing for permission to destroy the products inspectors found.

FOX 9 went to the stores and tried to contact the owners, but never heard from them.

But three of their neighboring competitors tell us those sales are a poorly kept secret, and they’re worried it reflects negatively on the entire industry.

"It's just like any other industry," Brown said. "There are bad actors out there and people who, you know, push the bar and it looks like, you know, allegedly they've pushed the bar."

OCM escalation

OCM has punished some other businesses by getting them to destroy illegal products or issuing fines.

"In this case, despite repeated inspections, both routine and triggered by complaints, Zaza refused to comply with the law," said OCM spokesperson Josh Collins. "The egregious nature of the violations required the office to escalate our enforcement action."