In news from the “Department of Dubious Achievements,” local cannabis powerhouse Cura Partners, which promotes itself as the “largest cannabis oil company in Oregon and California” now lays claim to another “largest”—the largest ever fine in OLCC history, be it cannabis or alcohol.
This was well covered by Pete Danko at the Portland Business Journal (PBJ), who explores the bigger story as to how the Oregon Liquor Control Commission (OLCC)—the state agency tasked with regulating and monitoring Oregon’s alcohol and cannabis industries—came about issuing the fine, and their reasoning for doing so.
The PBJ reports that the OLCC fine of $110,000 came for “mislabeling products,” those products being vaporizer cartridges. And not just a few: 186,152 vaporizer cartridges.
This isn’t great news for Cura, which hasn’t been having the best go of it lately. In May 2019, they announced plans of being acquired by Massachusts based Curaleaf Holdings, a vertically integrated cannabis company. I touched on that in December 2019 in a piece reviewing cannabis deals for the year, in which I wrote:
In May, MJ Business Daily reported that Curaleaf had agreed to acquire Cura Partners in an all-stock deal worth $949 million. But in late October, Cura Partners announced that the terms of the deal had been revised due to “changing market conditions,” reducing the amount of stock from 95.6 million shares to 55 million.” (At the time of that announcement in late October, that worked out to be worth about $390 million based on recent stock price.)
The PBJ covered that deal, adding that “Cura shareholders could earn up to an additional 40.55 million shares if its Select brand products hit certain sales targets starting at $130 million and topping out at $250 million—in 2020. The new deal also includes a possible $200 million payout if Select sales reach an even higher level, $300 million in 2020.”
2019 wasn’t particularly kind to Curaleaf either, as just two month later, they got hit with accusations from the Food and Drug Administration of “unsubstantiated claims” involving their CBD products line. As CNBC reported:
The FDA has issued roughly two dozen warning letters to companies for allegedly making unproven health claims about CBD products. This one against Curaleaf is notable because the company is a leading player in the booming CBD industry.
The FDA said Curaleaf made “unfounded claims about more than a dozen different CBD products” on its product web page, online store, and social media websites. Some of the claims it highlighted include “CBD has been demonstrated to have properties that counteract the growth of [and/or] spread of cancer” and “CBD has been linked to the effective treatment of Alzheimer’s disease …. And for allegedly “illegally selling” CBD products with “unsubstantiated claims” that the products treat cancer, Alzheimer’s disease, opioid withdrawal, pain, and pet anxiety.
But it proved to be a cruel, cruel summer, because the very next month, Curleaf got hit with a fine of $250,000 by the Massachusetts Cannabis Control Commission, which the Cannabis Industry Journal described as “failing to disclose a change of ownership and ask permission from state regulators before completing the transaction,” adding that the fine “is the largest penalty assessed by regulators to a state-licensed cannabis business to date.”
Which brings us back to Cura Partners 186,152 mislabeled vape carts. OLCC investigators discovered in early November that there were labeling problems, particularly the failure to inform consumers that the carts contained flavoring agents comprised of botanical terpenes, instead of terpenes derived from cannabis. In and by itself, that’s sketchy, but isn’t a crime against humanity. Along with the mislabeling, it was an issue that these flavoring agents were in violation of a recently enacted temporary 180 day state ban on flavored vape carts. It was overturned days later, but was in effect at the time. Some of the carts also contained MCT oil, which while commonly used in vaping products, is an ingredient which should have been listed, but was not.
Cura Partners began negotiations with the OLCC about how to address the problem, but didn’t do themselves any favors during that process, as the PBJ reports, “Even as the company was in discussions with the OLCC over the issue, Cura posted on Instagram that its 'flagship Select Elite uses only cannabis distillate and cannabis terpenes.’ This led to a $10,000 fine for misrepresentation, to go along with the $100,000 fine for mislabeling.”
Also per the PBJ:
OLCC Executive Director Steve Marks said the agency considered doing a recall in early November when the problems were discovered, given that the Select products were in violation of the vape ban. But a judicial stay on the ban quickly followed, and it wasn’t clear to the OLCC that the products posed a provable health risk—like a pesticide violation, for example—needed to bring a recall.
The OLCC left it to Cura to work to remove the products from the market, a move that Marks said might have been a mistake.
“In retrospect OLCC could have and should have done more,” he said.
Cura was anxious to get the penalties assessed and any fines paid ASAP, as they were expecting the deal with Curaleaf to close by February 1. They let the OLCC know as much, and as Danko writes, “the agency responded by prioritizing the matter.”
Cura partners employs 560 people in all of it’s markets combined, and has revenues of over $117 million. As OLCC Commissioner Matt Maletis said, “It’s obviously a substantial fine, reflecting our intention to strongly enforce our regulations. But we also wanted to recognize that Cura provides hundreds of living-wage jobs and we need to be responsive to companies as they evolve and grow and try to do business in Oregon.”
The settlement with the OLCC paved the way for Cura Partners and Curaleaf to complete their long planned merger, which went through this week.
However, if you are a consumer who purchased one of these mislabelled cartridges, Portland based attorney Micheal Fuller has started a class action lawsuit for those who bought those carts. The suit was brought on behalf of Elana and Tom Pope by Fuller’s law firm, and as Danko writes in the PBJ:
The class-action suit, first reported by Willamette Week, alleges unlawful trade practices and unjust enrichment. It doesn’t ask for damages „at this time,” but seeks „an order requiring Cura to provide an accounting of the profits it received from selling its misrepresented products in the past year, attorney fees, costs, disbursements, and an order requiring Cura to preserve all documents and information (and electronically stored information) pertaining to this case.”
Fuller’s website, has established a portal to allow a potential plaintiff the opportunity to add their names to the suit and submit proof of purchase of Select carts. The compensation is listed as being $200—although it’s unclear if that is per plaintiff or per cartridge.