Judge tosses lawsuits stemming from Michigan’s largest-ever marijuana recall

posted Jan 16, 2024 on mlive

LANSING, MI — A Michigan Court of Claims judge on Jan. 2 dismissed two lawsuits linked to Michigan’s enormous 64,000-pound, $229 million 2021 marijuana recall that impacted an estimated 60% of all cannabis products in the state.

The dispute centers on the Michigan Cannabis Regulatory Agency’s (CRA) Nov. 17, 2021 decision to recall any marijuana tested between Oct. 10 and Nov. 16, 2021 by Viridis Laboratories, a licensed safety lab tasked with ensuring cannabis products are safe for public consumption.

The CRA issued the recall after noticing the Viridis lab in Lansing passed as safe marijuana that had previously failed testing for the presence of aspergillus, a potentially harmful type of mold.

“We had started noticing in … our statewide monitoring system that packages were failing for aspergillus and then being sent the next day to the (Viridis) laboratories, at which point they were being reported as passing without remediation by the grower,” MRA Scientific and Legal Section Manager Claire Patterson testified on Dec. 2, 2021. If a product tests positive for aspergillus, the mold must be eradicated and the marijuana retested prior to sale.

The CRA verified through subsequent testing by other licenses labs that Viridis had passed marijuana with aspergillus, which led the agency to distrusts the lab’s results on many other marijuana products. The recall caused major disruption and unexpected costs throughout the market, as the CRA required all recalled marijuana be retested prior to sale.

Viridis in its lawsuits accused the CRA and various employees of issuing the recall as part of a “vendetta,” because they disliked that Viridis had such a large portion of the lab-testing market share.

Virids sought court intervention on several fronts — in state and federal court, as well as administrative complaints — claiming CRA employees infringed on the company’s right to due process and other violations, because it blocked sales without allowing Viridis an opportunity to contest the allegations.

A Court of Claims judge previously agreed with a portion of Viridis’ argument and reversed a part of the 2021 marijuana recall. Viridis operates two separate labs under individual licenses, one in Lansing and another in Bay City. The contaminated marijuana that was the basis for the original recall was tested in Lansing, however, the recall included marijuana tested in Bay City. A judge ruled the Bay City-tested marijuana should not be part of the recall and reversed it.

One subsequent lawsuit made its way to the federal courts and was dismissed in August. The judge ruled that Viridis didn’t have a constitutional right to due process, since marijuana is considered federally illegal contraband.

The recent dismissal of two remaining state cases in the Court of Claims marks an end to most of the lawsuits. Viridis is still facing off with the CRA in Michigan’s Office of Administrative Hearings and Rules court, which handles disputes involving state agencies. Ongoing hearings in that matter resume Jan. 22-24.

Viridis attorneys say they intend to continue pursuing financial damages from the CRA through the courts. The company wants compensation for the sales it lost and costs it incurred, due to the recall. There is one unresolved lawsuit remaining in Ingham County Circuit Court.

“We remain confident through the court process the facts and the truth will come to light and we can bring much needed accountability and transparency to the CRA and shine a spotlight on the state’s efforts to intentionally harm Viridis’ reputation and business,” Viridis attorney David R. Russell with the Foster Swift Collins & Smith law firm said.

CRA spokesman David Harns said: “As always, we respect the rulings of the judiciary as we continue to perform our regulatory duties.”

In addition to CRA concerns over marijuana contamination, the agency separately accused Viridis of artificially inflating THC potency results, which Viridis denies and is contesting in the state administrative courts. The level of THC in marijuana products can influence their value, as consumers are willing to pay higher prices for greater amounts of high-inducing THC.

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