For two months, there has been a flood of stories about the mysterious illness connected to vaping that has sent hundreds to the hospital and is linked with several deaths. As speculation about what might be causing the illness spreads, the Center for Disease Control is warning against vaporizer usage, and both federal and state bans on flavored vape pods are going into effect. While these actions may be well meaning, they are likely to only exacerbate the problem and fuel the black market.
Thankfully, not all governments are responding to the hysteria with bans and prohibitions. In Pennsylvania, the Department of Public Health, which oversees that state’s medical marijuana program, released a statement expressing confidence in the safety of cartridges made by its state-licensed medical cannabis producers and warning patients to not purchase from illicit vendors.
In California, Gov. Gavin Newsom announced he would seek to expand warning labels on vaping products, start a $20 million public awareness campaign about the dangers of vaping, and increase enforcement against counterfeit products.
But with over 1,000 illnesses and more than a dozen deaths linked to vaping, people are asking questions about how the problem started and what can be done to prevent any more harm.
And for cannabis companies, there’s another burning question: Why didn’t regulators do anything when they all saw this coming?
Companies Operating in Both the Legal and Illegal Markets
The ugly secret is that some companies in the legal, regulated cannabis industry are also selling their products on the black market. These illegal, untested products have been linked to vaping illnesses.
Prompted by a tip, investigators at the California Department of Consumer Affairs served a search warrant on Thursday, Oct. 3, at a light industrial space near Los Angeles.
There they found an illegal cannabis product manufacturing operation apparently operated by Kushy Punch, a legal state-licensed company.
Authorities seized a number of finished products, including gummies in Kushy Punch packaging and disposable vaporizers in Kushy Vape packaging.
Several sources familiar with Kushy Punch accused the company of maintaining two facilities: one licensed and one black market.
It is alleged that cannabis that tests clean goes through Kushy Punch’s licensed facility and into the licensed supply chain. Cannabis that fails the state’s stringent pesticide standards goes to the illicit operation and then to consumers.
“They are using untested black market oil that is heavy in pesticide,” a source said.
Kushy Punch’s licensed edibles are manufactured and distributed by Vertical Bliss Inc. of Northridge, a legal state cannabis licensee, according to documents posted on the Kushy Punch website. Kushy Punch is also alleged to own a distribution company that provides the company with the means to get its illegal products out to both legal and illegal dispensaries.
California Bureau of Cannabis Control (BCC) spokesperson Alex Traverso said about Kushy Punch, “There is a legal side of things and an illegal side of things. We’re still investigating both sides of the equation.”
Sources say that Kushy Punch management split the legal business from the illegal one when the company obtained a state cannabis manufacturing license. The source said Kushy Punch managers assigned the same staff members to work both the legal and illegal facility.
The company’s website also states that Kushy Punch is selling its products into both markets.
Kushy Punch describes itself as “California’s #1 edible” and provides a store locator tool listing licensed stores.
But it also states that it manufactures edibles and vape products for “California collectives and clinics for California medical card holders.” However, commercial medical collectives became illegal on Jan. 1, 2019. All retail sales now must go through a state-licensed retailers, who must only carry products from licensed cannabis manufacturers.
Industry experts suspect several licensed California cannabis manufacturers may be selling into the illicit market.
Experts familiar with California’s cannabis industry say the illicit market is three to five times bigger than the licensed market. Accordingly, there is big money to be made in the illicit market. Just 450 or so stores and couriers exist for a state of 38 million people, due to local licensing bans and delays. There are simply not enough retailers to meet the demand.
Licensed operators also cheat in order to offload products that don’t pass the state’s tough purity standards.
California’s statewide track-and-trace system has yet to get up and running—and may still be months away. Without that system, it’s easy to divert tainted cannabis.
Vape industry expert Peter Hackett, founder of AirVapor, explains the logic of selling out the back door. If a licensed company fails lab testing on 30,000 vape carts at $50 retail each, do they just throw away $1.5 million?
“Hell no,” says Hackett. “That’s going to get redirected into the underground black market network.”
California NORML co-director Ellen Komp also said she heard recently of an operator selling out the back door in Southern California.
“This reportedly started happening at the time when California pesticide regulations kicked in,” said Komp. “I suppose it stands to reason that not everyone might have destroyed all their expensive products.”
These illegal, counterfeit products can be made to look just like the real products, causing confusion among consumers.
In a report compiled by the California Cannabis Industry Association, illegal products have been found to carry a logo of a legitimate testing lab, along with fake “results stickers.” These stickers can easily be purchased online.
Moreover, illegal operators use cheaper products in their mixtures. In the current vape illness crisis, investigators found fillers like Vitamin E acetate and propylene glycol — two inexpensive substances that can be harmful when heated and inhaled.
With the extremely rigorous testing standards in legal markets, it’s unlikely that a filler would get into a cannabis product without the company being aware of it.
According to testing experts, most of the existing testing standards would have flagged the presence of a filler in a cartridge. Cartridges are tested in their final, packaged form, so it’s unlikely a manufacturer would put a cheap filler in after testing.
As a result, it seems pretty clear that much of the contamination is happening in the black market, without regulatory oversight.
The Weedmaps Connection
Without a doubt, Weedmaps is the most insidious player in the vaping crisis by assisting in the proliferation of the black market. Weedmaps accepts advertising from illegally operating retail shops, and in doing so, drives customers to these illicit shops. Some, if not many of the customers may not even realize that the shop they are entering is illegal.
Weedmaps was under pressure from the State of California to cease the practice of accepting advertisements from illegal operations, so the company sent out a press release stating that it would change the policy by the end of the year.
Why, one might ask, did Weedmaps ever accept ads from the illegal market, why did they fight California’s cease and desist, and why are they taking so long to stop the practice of advertising illegal products and shops?
The answer is a closely guarded secret: Weedmaps’ owners are allegedly also working in the black market.
At least one vape-related death has been linked to using a cartridge labeled “Lucky Charms” from a company called “West Coast Cure.”
West Coast Cure’s manager is Douglas Francis, CEO of Weedmaps. Papers filed with the California Secretary of State show that West Coast Cure’s address is the same as Weedmaps, in Irvine, CA.
West Coast Cure’s Twitter account links to weedmaps.com.
Accordingly, Weedmaps could now potentially be responsible for not only advertising an illicit product, but also for causing the death of the person that used that product.
And in a message to its customers that we obtained from an inside source, West Coast Cure admits that they are operating illegally and selling illegal products. The message said:
“Hey guys! We wanted to share that we finally are going to be licensed (we have been in pending status now for almost 2 years). However, that means that we will no longer be able to provide product to any collective that does not have a license. With that being said, we plan on working with you guys until we are sold out of product – which we are estimating will be within a month to two months max. We strongly encourage you guys to buy bulk in order to keep product stocked up even after we make our switch.”
The first sentence says it all: The company is operating without a license, and has not had a license for at least two years.
The vaping crisis is real and people are dying. The overwhelming majority of evidence points to illegal products purchased on the black market as the cause. Exacerbating the problem is that some well-known companies are operating in both the legal and the illegal cannabis market. These companies should be prosecuted to the fullest extent of the law and held responsible not only for their fraud, but for the illness and death they have caused.
Further details of the Weedmaps-West Coast Cure connection can be found in an article in MJBizDaily.
California’s Bureau of Cannabis Control encourages ethical operators and whistleblowers to report any illegal activity they see.
You can file a complaint at the BCC’s File a Complaint web page.