The Cannabis Regulatory Agency (CRA) has filed a series of formal complaints against HiCloud LLC, a licensed medical cannabis grower based in Hesperia, Michigan. The complaints, which could lead to significant penalties including fines, suspension, or even revocation of the company's license, arise from a series of alleged violations of the Michigan Medical Marihuana Facilities Licensing Act (MMFLA) and associated administrative rules.
HiCloud LLC, located at 7655 E. M-20, Hesperia, MI, holds a Class C medical grower license under the MMFLA. The company came under investigation by the CRA following a complaint from a concerned citizen in early November 2023. The complaint alleged that HiCloud was using an unapproved building at 4334 S. 184th Ave. in Hesperia for cannabis-related activities and was potentially diverting regulated cannabis products into the unregulated market.
The investigation revealed multiple issues, beginning with an incident on November 9th, 2023, when the owner of HiCloud, identified only as E.C., was stopped by the Michigan State Police (MSP) while driving a rental truck on Interstate 96 near Lansing. The vehicle was found to contain 43.5 pounds of suspected cannabis flower, along with three jars each of suspected cannabis wax oil and powder. E.C. was subsequently arrested and charged with a felony for possession with intent to deliver cannabis.
The CRA's formal complaint details a series of alleged violations based on both the initial citizen report and the findings of their own investigation:
Unauthorized Transfer of Cannabis: HiCloud is accused of violating Rule 420.108(6), which mandates that any transfer of cannabis by a grower must be conducted through a secure transporter. The suspicion that HiCloud was moving cannabis without proper authorization is central to this charge.
Failure to Accurately Enter Data into Metrc: The investigation uncovered that HiCloud was not properly documenting its cannabis inventory within Metrc, the state's mandatory seed-to-sale tracking system, as required by Rule 420.108(8). Harvest batches were reportedly labeled with handwritten tags instead of the required Metrc tags, raising concerns about the accuracy and legality of the company's operations.
Inadequate Video Surveillance: According to the CRA, HiCloud failed to meet the video surveillance requirements outlined in Rule 420.209(5) and Rule 420.209(12). The surveillance system at HiCloud's licensed facility failed to record footage on critical dates, including the day of E.C.'s arrest. Additionally, when CRA agents requested 30 days of surveillance footage, HiCloud did not comply in a timely manner, delivering the requested recordings nearly a month later.
Improper Storage of Cannabis: The CRA alleges that HiCloud violated Rule 420.212(1), which requires that all cannabis products be stored in a secure, limited-access or restricted-access area. The presence of cannabis in an unapproved pole barn, as reported by the citizen and supported by MSP findings, is a direct violation of this rule.
Failure to Report Felony Charges: Another significant violation involved HiCloud's failure to report the felony charge against E.C. within the required three-business-day period, as stipulated by Rule 420.602(2)(a). This delay was compounded by discrepancies in visitor logs, suggesting that the company may have attempted to obscure relevant information from regulators.
Unmonitored Visitor Access: Finally, the CRA's complaint notes that HiCloud did not adequately monitor or log visitors, as required by Rule 420.602(7). This lack of oversight raises further questions about the company's adherence to security protocols.
The CRA's formal complaints are currently allegations, and HiCloud LLC has the right to respond to these charges. The company may request a hearing within 21 days to contest the complaints or seek a compliance conference with the CRA to discuss the allegations and demonstrate adherence to the MMFLA and related rules.
Should HiCloud be found in violation, the penalties could include fines, restrictions on their license, or the complete suspension or revocation of their operating license. The CRA's actions underscore the importance of compliance with state regulations in Michigan's tightly regulated cannabis industry.
This case serves as a critical reminder for all cannabis licensees in Michigan of the serious consequences that can arise from lapses in regulatory compliance, particularly concerning inventory management, secure transportation, and proper surveillance protocols.
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