According to the LA Times, the founder of popular California cannabis brand STIIIZY has allegedly also been serving as a landlord to unlicensed cannabis dispensaries. The report outlines how STIIIZY’s founder, Tony Huang, owns multiple holding companies that were connected to numerous illegal dispensaries in California – all while continuing to operate in the legal cannabis space via STIIIZY.
One example cited by the report included a building in Compton with an exterior sign for “Jerry’s Liquor,” but on the inside, city code enforcers found a cannabis dispensary called Fly High 20 collective. According to the report, Huang has faced numerous legal actions by law enforcement over his alleged ties to illegal dispensaries in the past, but all have been settled out of court – in one case, via a fine of $450,000.
A spokesman for Huang and STIIIZY denied all wrongdoing and said Huang has no ties to the illegal cannabis market, and that as soon as Huang found out his tenants were running unlicensed cannabis shops, he tried to evict them.
Rumors about licensed cannabis businesses being embroiled in the unregulated market have been rampant for years, and “product diversion” – or back-channel selling of cannabis that was grown legally – has been an ongoing issue in many state markets. Earlier this year, Glass House Brands was accused of widespread product diversion through “burner distributors” and the brand has filed a lawsuit in response to the allegations.
A representative from the Department of Cannabis Control (DCC), California’s regulating body governing the legal cannabis industry, told the Times that the agency was investigating the situation, but that STIIIZY’s cannabis license remains active.
In addition to their cannabis products sold in California, STIIIZY has also launched a line of products under their “STIIIZY Hemp” label that contain intoxicating hemp-derived ingredients like Delta-8 THC, and can be purchased online by consumers in states where cannabis is still illegal, according to their website.
While most intoxicating hemp product brands are operating outside any state-level cannabis regulations, STIIIZY is one of a handful of licensed cannabis brands that has made a foray into Delta-8 (Cookies being another prominent example).
Delta-8 THC products have proliferated widely since the 2018 Farm Bill, with manufacturers claiming that according to the law’s definition of “hemp,” any products derived from hemp are legal so long as they contain less than 0.3% Delta-9 THC by weight. The DEA has disputed this interpretation, countering that intoxicating variants of THC extracted/synthesized from hemp are still controlled substances, but this hasn’t stopped manufacturers from selling them.
In the context of the LA Times’ report, as well as a recent report out of San Diego highlighting raids on local Delta-8 smoke shops that uncovered large amounts of fentanyl and other illicit narcotics, it seems the current state of cannabis legality – and consumers’ ability to know what is “legal” and what is not – is as murky as ever.
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