Los Angeles, CA--A Los Angeles judge has imposed a $128 million fine on a California-based cannabis company responsible for illicitly manufacturing millions of marijuana gummies.
[Image via Creative Commons]
This penalty is likely the most substantial recorded in California's cannabis industry history.
Backdrop: Unauthorized Operations Revealed
According to SFGATE report, the infraction traces back to 2019, when state investigators discovered that Vertical Bliss, previously associated with the renowned Kushy Punch gummy brand, had been clandestinely producing a whopping 3.3 million cannabis-infused gummies valued at around $64 million.
While Vertical Bliss was licensed to operate in Chatsworth, LA County, an undisclosed tip steered investigators towards an unauthorized production unit in nearby Canoga Park.
The report noted that during a raid at this facility, the California Department of Consumer Affairs discovered illegal cannabis products amounting to $21 million.
Additionally, documents revealed that this location was the production site for the said 3.3 million Kushy Punch gummies.
To add to the intrigue, an unheralded inspection at the Chatsworth facility showed that unauthorized Canoga Park site products were being reintroduced into the legal market.
In the report, Jennifer Fisher, a San Francisco-based cannabis attorney, mentioned that it's unusual to see such a setup, where products from unauthorized sources find their way back into the regulated market instead of the conventional outflow of legally produced items into the illegal market.
No Defense Leads to Maximum Penalty
The report noted that what's equally baffling is the complete lack of resistance from the company's side.
Vertical Bliss, after having their licenses revoked in 2019, neither responded to the civil suit filed against them in September 2020 nor defended their actions in court.
The result? The judge granted the state's request for the hefty $128 million fine due to the defendants’ failure to provide a defense.
The Current Status of Kushy Punch
While the illicit activities of Vertical Bliss have been exposed, the Kushy Punch brand remains prominent and continues to be sold across California and three additional states.
Notably, ownership has shifted hands, with Varavo now producing the acclaimed Kushy Punch products instead of Vertical Bliss. Efforts to get a comment from Varavo were in vain.
“DCC and our partners will do everything in our power to protect consumers and maintain the integrity of California’s legal cannabis market,” said Nicole Elliott, Director of the Department of Cannabis Control, per the report.
“We applaud the Court for its commitment to enforcing the rule of law in California’s cannabis industry," Elliott added.