The Colorado cannabis industry is facing a new hurdle after illegal pesticides were found in marijuana products being sold to the public. This finding has led to product recalls, plant quarantines and a lawsuit involving people who said they would not have consumed the product if they knew illegal pesticides were used on them.
The opaque regulatory environment of the cannabis industry has forced many businesses to self-regulate pesticide use. Although state officials have said they are developing a plan to oversee this issue, pesticide testing is not mandatory for Colorado cannabis businesses.
Situation gets worse
As if the situation in Colorado was not bad enough, CannLabs Inc. (CANL) announced that the agreement with Carbon Bond Holdings was terminated as of yesterday. CANL used to operate a cannabis testing laboratory and the company closed its only testing laboratory in Colorado earlier this week.
In early October, CANL disclosed the termination of CEO Genifer Murray through the filing of an 8-K with the SEC. A month before the filing, the company’s Board of Directors terminated Murray’s employment agreement due to a “breach of fiduciary duties”. The Board said Murray did not act in the best interests of shareholders and frequently disclosed confidential information to third parties.
The recent developments at CANL make the company look more like a soap opera, not a public company. We do not buy into the reasons behind the recent filings which disclosed the actions the board took against Murray and we will continue to watch how this plays out.
CANL says that they operate a lab in Connecticut, but we do not believe this to be factual. In early 2015, CANL announced that they opening the laboratory, however, the company has not announced any new developments since then.
What to expect going forward
The recent findings in Colorado, coupled with the news out of CANL, make it almost necessary for government oversight. Although the United States government wants no part of the cannabis industry, they continue to put people at risk.
If the government does not step in and find a way to fix the banking needs and testing needs, consumers will end up paying the price. The marijuana train left the station and it has gone too far to bring it back. It is time for the government to step up to the plate and bring cannabis fully into the mainstream.