McAllister Garfield, P.C. is a leading law firm defending marijuana businesses from MED enforcement actions. We recently submitted open records requests to the MED for all enforcement action settlement agreements from January 2016 to June 2017. The released records confirmed that McAllister Garfield handled the most cases out of our competitors. We take pride in aggressively representing business owners to avoid drastic consequences like a loss of license.
Please find below a summary of the MED enforcement actions from January 2016 to June 2017. This is all public information and we removed any obvious identifying information to protect business owners’ privacy. This is a good tool to see the kinds of things that people are doing wrong and the types of penalties that MED imposes. Please do not hesitate to contact our office if you have any questions or concerns.
2016-2017 MED Enforcement Action Settlement Agreements
Approximately ninety-two MED enforcement actions occurred between January 2016 and June 2017.
The most common enforcement actions are as follows: (43) underage sales, (32) operational violations, (13) use of unauthorized pesticides, and (4) financial/ownership rule violations.
Underage Sales
For violations related to underage sales (a total of forty-three), businesses typically incurred a fine and a seven-day license suspension. Fines ranged from no fine to $10,000.00. Individuals or employees of licensed businesses did not have to pay fines, but rather, served a ninety-day suspension. In two instances, individuals were required to complete community service hours. The majority of licensees were required to complete the Sell-SMaRT and responsible vendor training programs, submit revised operating procedures to MED, and purchase, install, and implement the use of identification scanners.
The most extreme case involved a repeat violation of underage sales. Consequently, MED imposed a $50,000.00 fine on the licensed business and the associated key license holder was required to pay $5,000.00.
Operational Violations
Thirty-two MED enforcement actions involved operational violations, which included but were not limited to the following violations:
- Failure to operate with a license;
- Continued operation under an expired license;
- Failure to use or maintain the required surveillance system;
- Failure to maintain business records;
- Failure to accurately input data and track inventory in the inventory tracking system; and
- Cultivating and possessing more than the permitted plant count.
Fines ranged from no fine to $100,000.00. If a fine was not imposed, then typically the licensee voluntarily surrendered his or her license or MED temporarily suspended the license, ranging from fourteen days to thirty days. Licensees were required to submit a revised operating procedures plan, complete the advanced METRC and responsible vendor training programs, and in a few instances, destroy all cannabis and cannabis product.
In the most extreme enforcement action, the licensee exercised privileges beyond the scope of its license and possessed more cannabis and cannabis product than its license permitted. MED required that all inventory be destroyed. The licensee paid $100,000.00 and a $50,000.00 fine to be held in abeyance for one year pending no further violations.
Use of Unauthorized Pesticides
In all thirteen pesticide cases, the Division placed an administrative hold on the licensees’ license alleging that testing of cannabis showed the presence of an unauthorized pesticide. All licensees disputed MED’s allegations and the testings’ results. Instead of immediately imposing a fine or revoking licenses, MED and licensees stipulated to a second sampling. If the second sampling showed the presence of an unauthorized pesticide, then a $5,000.00 fine would be imposed and the licensees would voluntarily surrender the product for destruction. In one case, despite disputing the allegations, the Licensee agreed to voluntarily surrender and destroy the allegedly contaminated product.
Ownership/Financial Violations
Four enforcement actions involved ownership/financial violations. In two actions, the licensee failed to disclose master services agreements to MED. The licensee in the third enforcement action failed to disclose a change in ownership. The fourth case and the most severe, resulted in a complete revocation of the licensee’s license. The associated key license holder was fined $150,000.00, prohibited from holding a license again in the future, and from holding any interest, financially or secured, in a license for ten years. MED required that all medical and retail cannabis be surrendered. Furthermore, the licensee had to submit a transfer of ownership application for ownership interest in all licensed entities within one year. The penalties were a result of the failure to:
- Disclose all persons with a direct or indirect financial interest;
- Disclose contracted management company;
- Disclose managers of each licensed premise;
- Provide accurate information;
- Receive Division approval prior to transferring ownership;
- Properly maintain visitor’s log and badges;
- Fully and accurately enter data into the inventory tracking system;
- Transport medical marijuana packages within the required timeframe; and
- Reconcile transactions at the end of each business day.
We are grateful for the industry’s confidence in us to represent them in these stressful situations. Please contact McAllister Garfield if you suffer any administrative enforcement actions.