A cannabis company based in the San Luis Valley is suing Colorado’s Marijuana Enforcement Division, alleging the agency has failed to uphold its statutory duty to protect consumers and prosecute bad actors.
The lawsuit, filed in Denver District Court on Monday by cultivator and manufacturer Mammoth Farms, accuses the division of ignoring companies that are diverting legal weed to illicit markets in other states, and punishing whistleblowers who try to raise concerns.
It also alleges the agency’s marijuana tracking and testing protocols are insufficient to identify bad actors and allow potentially dangerous products to reach cannabis consumers.
The Marijuana Enforcement Division does not comment on pending litigation, a spokesperson said by email Wednesday.
In its lawsuit, Mammoth Farms alleges that some licensed companies in Colorado are substituting hemp-derived tetrahydrocannabinol (THC) for marijuana in regulated products using methods that should get flagged by the state enforcement division. That’s an issue because while both hemp and marijuana are cannabis plants, distinguished only by their cannabinoid content, they are regulated differently.
Hemp is an agricultural product that’s legal nationwide, while marijuana is considered a Schedule I drug at the federal level. The plants are treated as two separate products in two separate industries with supply chains that are not supposed to comingle.
One way Mammoth Farms alleges that is happening is through the use of so-called “ghost tags” that create fake inventory in Metrc, Colorado’s system that tracks marijuana production from seed to sale.
“When a cultivation sells a ghost tag to a manufacturer, it falsely reports a sale of marijuana in Metrc, often at a nominal price, leading MED to believe that the manufacturer has purchased legally cultivated marijuana. The manufacturer then labels its Converted THC (from hemp) for sale as THC naturally derived from that non-existent marijuana,” the lawsuit says.
The complaint also states that, in 2023, Mammoth Farms twice alerted the Marijuana Enforcement Division to a “ghost facility” in Moffat that was selling cannabis distillate without having the necessary equipment to extract it. The agency did not investigate the facility in a timely manner, the lawsuit alleges. Eventually, regulators tested the company’s products and found the presence of a solvent called methylene chloride, which is used in a chemical process to convert cannabidiol (CBD) from hemp into THC.
In June 2024, the state issued a recall on vape cartridges that tested positive for methylene chloride.
“We simply hope to see the MED take the proper steps in order to protect public safety, cannabis consumers and licensed business operators,” Justin Trouard, CEO of Mammoth Farms, said by email. “The MED is aware of the issues brought up in the suit as well as the damage these problems have caused. It is shocking to see no effort on their part, and that is why we believe that a change in leadership at the department is necessary for the safety of cannabis consumers and the future of our state’s cannabis industry.”
