While the federal government still regards marijuana as an illegal drug, medical use of cannabis has been legalized in 40 states; recreational use by adults has been approved in 24. With legalization has come a new system of regulation of producers and retailers. And where there are rules, there will be violations. We are now collecting data on those cases in Violation Tracker.
The latest update to the database contains 528 enforcement actions against cannabis cultivators and dispensaries totaling nearly $23 million since 2014. We collected this information from 14 states through publicly available online data or open records requests.
With the exception of a single case from the Los Angeles city attorney, all of the regulatory agencies are new to the database. Each of these regulators is specific to cannabis oversight.
While the growing process for medical and recreational marijuana is the same, there are key distinctions in how the product is dispensed. One requires a doctor’s note while the other requires simply being over the age of 21. Medical cannabis is under more stringent regulation to ensure the product is safe for use by patients that may have more sensitivities than the average adult user. Even still, the majority of Violation Tracker’s new cases are enforced against recreational facilities as they are not constrained by medical privacy laws.
North Dakota and Delaware’s medical marijuana programs, for example, denied our open records requests citing that “compassion centers”, or medical marijuana vendors, are protected under confidentiality clauses similar to other medical providers.
We were able to collect medical marijuana enforcement actions from four states: Hawaii, Pennsylvania, Virginia, and Utah. Pennsylvania was the only state with substantial penalties–20 cases totaling over $1 million since its availability in 2018.
Recreational cannabis yielded better disclosure results with 10 states providing enforcement actions. There have been nearly 500 cases brought against adult-use cannabis businesses totaling almost $22 million in penalties since its initial legalization. Colorado–the pioneer of recreational weed–has unsurprisingly issued the highest number of enforcement actions (227) with penalties totaling $6.5 million. Not far behind, Nevada has penalized cannabis companies nearly $6.4 million despite legalizing marijuana five years later. Washington has overseen 121 cases with over $1.8 million in fines and settlements. The remaining states have brought fewer than a hundred cases each for noncompliance with cannabis regulations.
Cannabis cases cover numerous categories of violations. The major ones include dispensing medical cannabis to patients without an active medical marijuana identification card; inappropriately marketing products; failing to properly test for heavy metal contamination or pesticides; and allowing underage customers to purchase products.
At the moment, the cannabis industry is saturated with small growers or retailers, so none of the new companies are included in our parent universe. This may change over time as the industry continues to grow.
Two individual cases surpassed penalties of $1 million–in California and New Mexico–for violations related to licensing requirements, particularly failure to comply with inventory tracking, which monitors the movement of cannabis goods through the supply chain from seed to sale. Administrative procedures and ownership disclosures are especially important as many of the companies in this industry are independent LLCs with little to no transparency of financial interests.
State regulators, currently our only advocates for accountability, need to ensure enforcement closely follows the rise of the marijuana industry as more players vie for a spot.