For nearly two and a half years, Michigan's cannabis industry has been closely monitoring a significant legal dispute between state regulators and Michigan's largest cannabis testing facility, Viridis Laboratories. This conflict, stemming from one of the most extensive recalls in the state's young cannabis industry, has led to extensive legal proceedings and could significantly impact future regulatory practices.
The administrative hearings between Viridis Laboratories and the Michigan Cannabis Regulatory Agency (CRA) concluded last Wednesday after multiple days of testimony. Although the hearings have ended, the legal process is far from over. Both parties will submit written closing briefs and responses over the next six months, and subsequent appeals are anticipated even after a final decision is made.
Central to this litigation are questions about Viridis' compliance with testing methods designed to accurately detect contaminants and measure the potency of THC, the psychoactive compound in cannabis. Testimony from these proceedings reveals a complex narrative involving historical complaints, the company's founders' connections to the Michigan State Police, and allegations that Viridis was unfairly targeted by CRA employees after raising concerns with Governor Gretchen Whitmer's office.
Viridis Laboratories CEO and founder Greg Michaud questioned the state's motives, suggesting that the recall and subsequent legal actions were efforts to justify initial allegations against the company. "You've got to step back and ask yourself: Why is the state using so many of their resources targeting one agency on what basically, it is saying, is an unapproved potency method?" Michaud stated.
The CRA declined to answer specific questions, pointing instead to extensive hearing transcripts. The agency is currently advocating for legislative changes to allow it to collect, possess, and test cannabis through a state-run lab to establish standards for licensed testing facilities.
Attorney Michael Komorn, a veteran cannabis defense lawyer, emphasized the industry's focus on the case. "If true, it creates a potential health risk for the consumer, which is contrary to what the regulated system purports to provide," Komorn said regarding the allegations exchanged between Viridis and the state. He underscored the importance of this case in the regulated market since 2016.
In May 2022, the CRA issued updated complaints against Viridis, alleging issues with potency, microbial and foreign matter contamination, and quality management. The CRA's interest in Viridis was reportedly driven by concerns over inflated THC potency, but flaws in Viridis' contaminant testing ultimately led to the recall.
During a hearing, the state presented data indicating that several of Viridis' tests for the mold aspergillus were overturned by retests from other labs. Despite Viridis' lower failure rates for aspergillus compared to industry averages, CRA's Claire Patterson expressed concerns over the abnormal data.
Viridis has contested the state's findings, suggesting that the retest results were manipulated and that the sample fragments tested may not have contained the same contaminants. Over recent months, Viridis has attempted to prove in court that it was unfairly targeted by the CRA to diminish its market share.
Michaud testified that after expressing concerns about CRA's administrative rules and alleged unethical practices within the agency to Governor Whitmer's Chief Operating Officer, Tricia Foster, Viridis faced increased scrutiny. Foster reportedly dismissed Michaud's concerns, which Michaud believes marked the beginning of targeted actions against Viridis.
Former CRA employee Leeann Barrett testified that CRA scientist Allyson Chirio expressed persistent doubts about Viridis' testing methods, particularly its potency results. Chirio's comments, according to Barrett, were part of ongoing discussions about the validity of Viridis' scientific methods.
Viridis, run by former Michigan State Police employees, including Michaud, Chief Science Officer Michele Glinn, and Chief Operating Officer Todd Welch, has maintained its methodologies are robust and independently accredited. The company has continued to use its potency testing method, certified by third parties, despite ongoing disputes with the CRA.
Viridis' connections with the Michigan State Police extend to performing marijuana testing for the agency's Marijuana and Tobacco Investigations Section since 2020. Michaud highlighted the potential impact of CRA's allegations on these longstanding relationships and contracts.
Moreover, Averhealth, where Glinn serves as a toxicologist, faced scrutiny from the Michigan Department of Health and Human Services, which discontinued its use for drug testing in child custody cases. Averhealth had planned legal action against the state, alleging a breach of contract, though it later withdrew the notice.
As this protracted legal battle continues, its outcomes will be closely watched by the entire Michigan cannabis industry, shaping future regulatory practices and standards.
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