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A Colorado cannabis cultivator has filed a lawsuit against the state’s marijuana regulators, with a spotlight on what it describes as massive oversights in the state’s testing regime that the cultivator claims endanger public health and allows for the illegal diversion of cannabis into black markets.
The lawsuit, filed earlier this week in Denver District court by Saguache-based Mammoth Farms, calls for court-ordered changes to the state’s testing protocols and represents the most forceful claim of bad oversight by the state’s Marijuana Enforcement Division (MED).
Mammoth Farms tried to alert state officials about specific facilities exploiting loopholes in the state’s regulations, the lawsuit asserts, but no action was taken. The lawsuit contends Mammoth has suffered, along with other “legitimate businesses,” because they don’t exploit loopholes in the state’s regulations, which means law-abiding cultivators don’t operate on a level playing field and are at risk of going out of business.
These latest claims also come just one month after a Gazette investigation into cannabis testing in the state, which found evidence of mold testing manipulation in an analysis of 325,000 test results. The Gazette’s findings support the anecdotal accounts of widespread cannabis testing manipulation, and align with the limited number of state investigations that found testing protocol violations in half of all MED discipline actions in 2024.
The Gazette also found a risk of health hazards tied to contaminants and mold in marijuana products sold throughout the state.
If a court sides with Mammoth Farms, an 80-acre San Luis Valley operation that advertises itself as the largest outdoor cannabis cultivator in North America, Colorado could be forced to overhaul large parts of the state’s cannabis testing systems.
A spokesperson for Colorado’s Marijuana Enforcement Division declined comment, stating that the division has a policy against commenting on pending litigation.
The lawsuit states that rogue operators regularly exploit loopholes in state regulations to divert marijuana into the black market, where they can sell their product at about three times the price the product would fetch in regulated markets.
Voters initially backed legalization of marijuana in part because of promises that doing so would eliminate the black market, not feed it.
But the lawsuit contends the state’s $1.6 billion marijuana industry lost an estimated $100 million in marijuana sales tax revenue over the past two years because state officials have allowed rogue state-licensed marijuana cultivators to divert their product into these black markets.
At the same time, those operators also have an economic incentive to sell “cheap and dangerous” products rife with contaminants and pesticides in Colorado’s regulated marijuana market, the lawsuit states.
The lawsuit contends that bad actors illegally produce a “type of synthetic THC” from Hemp through the use of dangerous contaminants. This “converted THC smuggled into Colorado’s regulated market can sell for approximately eight times its cost once it gains a false veneer of legitimacy as a natural marijuana product developed under Colorado’s regulatory oversight,” the lawsuit states.
The lawsuit further states: “MED’s failure to develop a system that tracks when marijuana leaves the regulated market and when other products enter the regulated market undermines nearly all the policy goals underlying Colorado’s regulatory framework surrounding marijuana.”
A process that can be used to convert low-THC hemp into consumable high-THC products, even though hemp and marijuana are regulated differently, has two tangible effects, the lawsuit argues.
First, while hemp usually has far less THC than marijuana, hemp still can be manipulated through the use of toxic industrial chemicals to produce a type of synthetic THC sold in the regulated market as distilled products coming from marijuana flowers, the lawsuit states. This also allows marijuana flowers substituted by the hemp to be diverted to states where cannabis is not legal, the lawsuit further contends.
Second, the conversion process can leave methylene chloride residue in the converted THC-containing products, a chemical residue that is highly toxic and which can be tested for, but which is not tested in Colorado. The lawsuit claims that tests performed on converted THC-containing products have shown the presence of methylene chloride.
Colorado’s porous regulatory system has allowed “numerous” marijuana products sold in the state’s regulated market that contain harmful contaminants, the lawsuit claims, including methylene chloride, which can cause cancer and a study found had caused at least 85 deaths between 1980 and 2021.
Even when contaminants are found, the state’s recall system often kicks in too late and does a poor job of protecting consumers, according to the lawsuit.
The lawsuit noted that the state’s Marijuana Enforcement Division in June 2024 issued a health and safety advisory recalling vaporizer cartridges containing methylene chloride and unapproved pesticides sold at one marijuana facility, but the contaminated products still were sold from April 14, 2023 to May 30, 2024.
“Thus, on this one occasion alone, MED’s inaction caused thousands of Coloradans to be exposed to these harmful substances,” the lawsuit states.
“Despite knowledge of methylene chloride and its detriment to the Colorado consumers, the MED has nevertheless failed to require this or any other test to identify methylene chloride, which is known to cause adverse health effects, and which Coloradans continue to unknowingly ingest,” the lawsuit adds.
Mammoth further contends in the lawsuit that it had alerted state regulators that the manager of a marijuana cultivation operator had a Jan. 9, 2025, criminal felony drug possession conviction, which Mammoth claims should have barred that manager from continuing to work in the marijuana industry under the state’s rules. Despite that alert, the state regulators “unreasonably delayed enforcement,” and they still have not suspended the manager from continuing to work in the industry, according to the lawsuit.
“Mammoth understands that this manager diverted approximately $3.4 million of marijuana to illegal markets in 2024 alone,” the lawsuit states.
In another case cited in the lawsuit, state regulators took no action against an “individual with over 100 felony charges and convictions for theft and other crimes committed while scamming the elderly,” the lawsuit alleges.
More directly echoing the Gazette’s recent investigation, Mammoth Farms claims that the existing testing regulations can easily be evaded by those looking to game the system.
“Even the testing MED does require can be easily circumvented by bad actors,” the lawsuit argues. “Because MED allows regulated entities to collect their own testing samples, bad actors can provide non-representative samples while providing the public with marijuana products that contain dangerous contaminants like pesticides, solvents, and microbes.”
This stems, the lawsuit claims, from a simple allowance afforded to cannabis producers: “MED allows producers and manufacturers to self-select products for testing.”
This not only leads to problems highlighted in the lawsuit, Mammoth Farms claims, but also deviates from other regulated industries in the state.
“For example, hemp is subject to third-party sampling by a company that could also select marijuana samples in the same way,” the lawsuit states. “The anomaly of self-sampling in the marijuana industry allows bad actors to send in samples of uncontaminated product, which are then used to pass the entire batch even though other products are contaminated.”
The lawsuit explains that Mammoth Farms tried to bring all of this to the attention of MED, but without adequate follow-through by the agency, leading directly to public health dangers.
The lawsuit claims that if MED had acted on Mammoth’s tips, tested products for methylene chloride or even analyzed testing data available to the agency, “thousands of Coloradans might not have been exposed to these harmful and toxic substances.”
The lawsuit calls for emergency rulemaking to address the issues identified, which could mean a substantial overhaul of the state’s testing regime.
”}]] Mammoth Farms, a Colorado cannabis cultivator, has filed a lawsuit against the state’s marijuana regulators, alleging that the state’s testing regime is flawed and endangers public health, allowing for the Read More
