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The cannabis industry is dividing over what to do about intoxicating hemp. Operators who bought into state-regulated industries are watching hemp brands skirt taxation and over-regulation with profits to prove it. However, they can’t blame them for jumping through a lucrative loophole–though potentially lost profits and taxes are an issue. Also, some hemp companies take advantage of the lack of regulation, selling goods with potentially harmful byproducts. Not all hemp THC brands are bad actors, but there are enough to warrant cautioning those shopping the market.
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State regulators take varied approaches to untie the knot created by the competing industries. California is hunkering down for a temporary ban on hemp THC products, while Kentucky has opted to regulate them. In Colorado, one cannabis farmer is taking things into his own hands in the form of lawsuits.
Mammoth Farms files another cannabis industry lawsuit
Mammoth Farms recently filed a lawsuit against the Colorado Department of Revenue, claiming that the Marijuana Enforcement Division (MED) has failed the public regarding safety and lost taxes. Justin Trouard, Mammoth Farms CEO, explained to GreenState why now was the right time to file against the regulators.
“After 18 months of disappointment with our regulators, we felt that our options had run out,” Trouard said. “We also now have METRC data that proves the regulators were not being honest about their efforts. It confirms exactly what we have stated for over a year. Now that we’re finally able to prove it we felt the timing was right.”
This is not the first time Mammoth has filed suit on the topic or called out a brand for using hemp THC in regulated products.
Mammoth filed a complaint against Bonanza Cannabis Company, Ware Hause, South Platte Distributors, Dutch Botanicals, and Walsenburg Cannabis in June 2024. That suit claimed the brands knowingly infused or sold products with hemp-derived THC, which it deemed as deceptive trade practices.
Bonanza responded by seeking damages in a countersuit, alleging Mammoth filed suit without merit in an attempt to boost its sales. The countersuit alleges that Mammoth engaged in defamation to extort a business contract, claiming that the farm offered to drop things if they signed a deal. Bonanza is no longer a plaintiff in the litigation and the countersuit is pending with the court.
While Bonanza defends its name, fellow plaintiffs Ware Hause and South Platte Distributors don’t have as strong of a foundation. These products triggered a recall for methylene chloride and unapproved pesticides. Bonanza is no longer on the complaint but litigation is ongoing.
Brass tacks of Mammoth v. MED
Mammoth’s litigation against MED claims the entity failed to stop bad actors from diverting regulated Colorado bud into illegal markets. It posits that $100M in tax revenue may have been lost with the diverted product. Testing protocols are called into question, citing self-selection of samples and lack of standardization as oversights that have led to harmful products on shelves. The lawsuit also places blame on the tracking system, which it claims can be manipulated.
As for the intoxicating hemp space, the suit asserts that “unsafe and illegal” products that contain THC converted from hemp plants are on Colorado dispensary shelves. Mammoth claims to have proof that these products are often dangerous and test positive for potentially cancer-causing methylene chloride. There is currently no way to test whether THC is derived from hemp or cannabis plants.
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MED responded to GreenState’s request for comment that they do not speak on ongoing litigation.
These efforts have not earned Mammoth Farms accolades from all of their peers. Two camps have formed: those who appreciate the lawsuit and those who disagree with the move. Companies previously targeted by Mammoth may organically skew against the farm.
Trouard expressed that his motives are pure.
“We hope to see regulations that protect the tax base and consumer safety,” he said. “It’s a matter of finding leadership smart enough to understand what needs to be changed, humble enough to admit they were wrong and brave enough to reject illicit lobbying efforts.”
Whatever the reasoning behind the suit, it is forcing Colorado courts to assess and judge the current industry. Litigation like this sets a precedent for future efforts, whether it succeeds will dictate how.
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“}]] Mammoth Farms, a Colorado cannabis company, filed a lawsuit against state regulatory bodies regarding standards and functionality. Read More
