Officials are currently working on ways to regulate the cannabis market. But they may risk overstepping their bounds. Read on to find out what happened when a medical marijuana company sues South Dakota Department of Health.
Medical Marijuana Company Sues South Dakota Department of Health: What’s the Story?
The South Dakota medical marijuana company, 605 Cannabis has filed a lawsuit against the South Dakota Department of Health (DOH) alleging the improper issuance of violations, overreach, and attempts to enforce unnecessary rules. They are requesting damages of over $1 million.
The lawsuit the medical marijuana company sues South Dakota Department of Health
is contained in a forty-nine-page document and dates to January of 2023 when the company facility was inspected while the business was partially closed due to a blizzard. 605 is claiming the inspection was not properly handled.
“On January 19, 2023, the region where the 605 facilities (manufacturing and cultivation) are located was covered in snow due to a blizzard and the 605 facilities were consequently not fully operational, not open during its normal business hours, and key staff members were not present,” reads an excerpt from the complaint.
The company states that the DOH inspected the facility despite the limited staff and closure violating a rule that states inspection must occur during business hours.
They allege that the DOH took samples of cannabis and products during their inspection and then issued 19 violations. 605 claims the company did not specify whether these violations were due to cultivation or manufacturing issues.
Nine Violations of the Medical Marijuana Company Sues South Dakota Department of Health Case
605 medical marijuana company sues South Dakota Department of Health primarily due to nine serious violations stemming from the inspection which ultimately led to the organization suspending the company’s manufacturing and cultivation licenses.
Here are the nine violations along with the company arguments.
- Finding 1: The first finding of the medical marijuana company sues South Dakota Department of Health case claims the company failed to test its products before sending them to market- 605 says it tests all its products and offers proof of testing
- 2. Finding 2: 605 added Delta-8 and terpenes to its cannabis products: The company states that its products contain Delta-8 and terpenes, but these are naturally derived. They also add proof of testing showing their terpenes and Delta-8 were naturally derived and FDA-approved. They argued that the state does not prohibit Delta-8 and terpenes in cannabis products. They asked for proof that the state prohibits Delta-8 and terpenes in cannabis products and received no response.
- Finding 4: Failure to restore a non-usable batch of cannabis, failure to have working security cameras, failure to follow proper operating procedures: The company argues that the present staff misinformed inspectors about the destruction of the cannabis. They stated that no cannabis was destroyed which would have required following procedures for remediation or destruction. They also said their cameras were functional during the inspection. However, they were later reconfigured. The DOH was aware of the updates that were made.
- Finding 5: Improper additives in cannabis: This finding also refers to the addition of Delta-8 and terpenes. 605 noted that the rule the DOH referenced applies to cultivation only but the violation referenced the company’s manufacturing license.
- Finding 7: Finding 7 in the medical marijuana company sues South Dakota Department of Health case involves noncompliance with transactions recording, testing, and inventory recordkeeping: 605 stated that it provided the DOH with the tests alleged to be missing. They also pointed out a known issue with its tracking system which resulted in tests not linking to the correct product.
- Finding 11: The failure to install permanent security cameras: 605 stated that the inspection found a blind spot in one of the cameras and the issues have since been remedied.
- Finding 12: The failure to provide computer access to cameras and verify that they were recording: 605 said staff members showed camera footage to inspectors on a mobile phone. Computer access to the camera footage was not available during the inspection, but the company contends that S.D. Admin does not clearly state that access must be provided by a computer. They believe this violation was unwarranted.
- Finding 20: Failure to provide a pesticide application for the agent applying pesticides: The company stated that they do not carry pesticides requiring a pesticide applicator. They believe the violation was made in error.
- Finding 21: Finding 21 in the medical marijuana company sues South Dakota Department of Health involves failure to provide a food service establishment license for manufacturing edibles: 605 said they provided inspectors with a copy of their Food Manager Certification which was alleged to be missing at the time of inspection. They said the confusion was due to knowledgeable staff not being present when the inspection took place.
Other Facts to Know About Medical Marijuana Company Sues South Dakota Department of Health
Here are some other facts to be aware of in the medical marijuana company sues South Dakota Department of Health case.
605 says they attempted to negotiate a settlement with the DOH but have been unable to reach an agreement. They say the primary point of contention has to do with the alleged presence of Delta-8 and terpenes in the product.
They have accused the DOH of interpreting cannabis laws inaccurately, failing to follow applicable inspection laws, failing to uphold communication with the company, and failing to have a clear understanding of the cannabis industry, particularly concerning cannabis extraction processes.
They say the suspension of their license has led to a loss of $1,300,000 and claim their rights have been violated due to the DOH misapplying rulemaking procedures.
605 alleges the DOH failed to produce test results for the products they took during the inspection despite company requests.
They say the DOH’s actions have caused irreparable damages in terms of profit loss and reputation damage. They say they have had to lay off employees and are at risk of going out of business.
The company is seeking a declaratory ruling on its DOH complaint and an injunction to allow them to do business as the court case moves forward. They are also seeking monetary damages.
605 said they cooperated with the DOH throughout the process voluntarily recalling products and seeking guidance although they maintain that none of their goods pose a health risk.
The media has reached out to the DOH for comment but has yet to receive a response.
We can only wait and see how the medical marijuana company sues South Dakota Department of Health case will resolve.