A contentious, expansive marijuana recall in Michigan will proceed in part after a state judge denied a cannabis testing company's request for a preliminary injunction for a recall of products tested by one of its labs, but granted it for the other.
This split decision from Michigan Court of Claims Judge Christopher Murray came Friday after Murray heard more than six hours of testimony Wednesday and Thursday from lawyers and employees representing the state's Marijuana Regulatory Agency and from the plaintiff, Viridis Laboratories and Viridis North.
"Public safety concerns are one of the main purposes and duties of the MRA, and undoubtedly it believes the recall of both Viridis and Viridis North was necessary to protect the public," Murray wrote in his 13-page opinion and order.
"But when there is no evidence that Viridis North’s testing also fit into that category, the safety concerns are reduced," he said.
A spokesperson for the MRA said the agency immediately implemented actions to comply with the court’s order, including releasing the administrative holds on all products tested by Viridis North.
Viridis Laboratories and Viridis North, located in Lansing and Bay City, respectively, filed a lawsuit last week against the MRA and several employees at the agency after the MRA said it had identified inaccurate and/or unreliable results of many marijuana products tested by the labs over a three-month period.
The health and safety bulletin issued by the agency said the affected products either needed to be retested for the microbials compliance panel or thrown away, suggesting there could be mold, and specifically Aspergillus, in the marijuana products.
But in the lawsuit, the labs said there was no public or safety risk to justify the recall, and instead said the MRA was unfairly targeting Viridis as a way to drive more business to other labs. Viridis tests between 60%-70% of the legal cannabis industry's products, or about $229 million worth, the lawsuit estimated.
Viridis, in an emailed statement, applauded Murray's decision, which it said will release about half of the affected product from the recall. With the court’s ruling, recalled products at the Bay City lab are now cleared to go back to market immediately, the company said.
“While we maintain that the entire recall was completely without merit, we applaud the court for at least reversing the MRA’s faulty decision to recall products tested at Viridis Bay City,” Kevin Blair, an attorney with Honigman LLP, said in the emailed statement.
Murray, in his opinion, didn't take issue with the MRA issuing a recall and said it was within its rights to do so.
The basis for the recall, he said, was the failed 10 retested samples and the lack of an incubation log.
However, because all of the retested samples, which were randomly selected, came from Viridis Laboratories in Lansing and not Viridis North in Bay City, "the absence of any retesting of products at Viridis North eliminates one of the two factual bases for issuing the recall," he said.
"Although the MRA has legal support to institute a recall, the factual support for the action is not present, at least for Viridis North," Murray said.
Viridis Laboratories and Viridis North are separate limited liability companies, but share ownership.
Much of the testimony from Viridis employees and customers focused on the impact of this recall. Murray questioned why a recall would hurt Viridis' business when they happen frequently in meat and other industries and those companies quickly move past it and survive.
"It hurts our credibility immensely because (the agency) is basically saying that nothing we did could be relied on and the evidence they're using...it would be a minor finding in an audit," said Dr. Michele Glinn, founder and chief science officer of Viridis Laboratories, in her testimony Wednesday. "It's not something to disrupt the business like that."
Glinn also said it's likely Viridis will lose many customers because of this recall: "They get the feeling that, 'How do we know this isn't going to happen again?'...so they're leery about dealing with us. A lot of them have lost a lot of money and they're angry."
Johnathon Koweck, director of supply chain for Lume Cannabis Co., one of Michigan's largest cannabis companies, testified on Thursday that $2.5 million worth of Lume's product is tied up in the recall. He said $80,000 worth of product that was displayed had to be destroyed.
But Risa Hunt-Scully, an assistant attorney general representing the MRA, countered that consumer safety was at risk, noting that the retested products had a 60% failure rate.
The Michigan Chamber of Commerce, the state's most powerful business lobby, filed an amicus brief Tuesday, calling the MRA's recall an "extreme and unconstitutional government overreach."
The chamber's brief, filed through the Detroit-based law firm Miller Canfield, said the agency acted outside its authority, its recall bulletin didn't follow the notice and comment rulemaking process and because the labs can't retest their products, they are effectively put out of business, violating their due process.
"The MRA’s attempt to act as a czar of Michigan’s marijuana industry exceeds both its statutory and constitutional authority and sets a dangerous precedent for other regulated industries," the brief said.
Contact Adrienne Roberts: firstname.lastname@example.org.
This article originally appeared on Detroit Free Press: Michigan Court of Claims decision limits massive marijuana recall