Delta Extraction issues response letter to customers following DCR communications on product destruction
The ongoing legal battle between Delta Extraction and Missouri cannabis regulators is sure to have a lasting impact on both operators and regulators.
Delta Extraction, a once prominent marijuana manufacturer in Missouri, continues to challenge the Division of Cannabis Regulation (DCR). The conflict, arising from regulatory actions, a significant product recall, and finally the revocation of Delta’s license, underscores the complexities of evolving cannabis regulations and their impact on businesses and consumers.
In August 2023, DCR issued a recall on products manufactured by Delta Extraction, sold to dispensaries and manufacturers, after alleging the company mixed marijuana products from outside Missouri with locally grown cannabis. More than three months later, DCR issued a letter stating the Division would revoke Delta Extraction’s license effective December 2, 2023.
Delta Extraction’s co-founders, Jack Maritz and Ted Maritz, assert that the regulatory body’s actions are unfounded. Central to their argument is the use of tetrahydrocannabinolic acid (THCa), a non-psychoactive compound. According to Delta, the use of hemp-derived THCa in products produced at the Delta facility, which was activated to THC in Missouri, complied with state rules before the current regulations took effect in July 2023.
The company’s legal counsel, Chuck Hatfield, has argued that Delta’s products, which passed state testing before being sold, did not warrant such severe actions. He emphasized that Delta’s compliance officer at the Department was aware of the company’s processes.
On November 17, 2023, DCR sent an email to licensees detailing procedures for handling recalled products. The email outlined options for voluntary destruction or transfer of recalled products to another licensee for storage or destruction. It emphasized that licensees must request and receive DCR approval before proceeding with either action.
In response, Delta Extraction shareholders are distributing a letter to its partners, urging them not to destroy any products until the litigation is resolved. The email, underscoring the company’s commitment to challenging DCR’s decisions, reads:
“Dear Customers,
As you may have heard, Delta Extraction is moving forward with its legal challenge to DCR’s unwarranted and unlawful penalties. We are optimistic that we will prevail in Court, but that process can take time. As that process plays out, we encourage you not to destroy any product until the litigation is resolved. Delta Extraction will continue to provide updates as its legal challenge moves forward.”
For licensees holding Delta’s recalled products, the situation poses practical and financial challenges. DCR’s guidance on handling these products – either destroying them, continuing to quarantine them, or transferring them for destruction or storage – places additional burdens on these businesses. While the destruction of the recalled product may offer respite in the form of additional vault space, the cost could be great. Meanwhile, it is noteworthy that the recreational program bolstered the company’s sales; most product that is locked remains unpaid by customers.
Delta’s advice to its customers not to destroy any products until the litigation concludes, adds another layer of complexity. Should Delta prevail and emerge with an active license, the company would be in a position to be able to reclaim any recalled product. The state’s guidance, allowing operators to destroy Delta products assumes that Delta will not be successful and there are no further actions to be taken, regardless of months of settlement discussions and continuing legal review.
Should Delta be successful, operators who have already destroyed products maybe be left without recourse or the ability to be compensated.
This ongoing legal battle highlights the growing pains of the cannabis industry, emphasizing the need for clear regulations, consistent enforcement, and open dialogue between businesses and regulators. The outcome of this dispute could shape the future regulatory framework for cannabis derivatives in Missouri and potentially influence other regions.
Delta’s stance, representing a mix of legal defiance and business survival, resonates as a rallying point for cannabis operators concerned with what they perceive as inconsistent and uneven administration of regulation. As Delta continues its legal fight, the industry watches closely, the battle between Delta Extraction and DCR is more than a singular legal spat; it encapsulates the teething troubles of a nascent industry grappling with regulatory frameworks. The case has become a focal point for the industry, sparking not only legal challenges but also debate over the interpretation and application of cannabis regulations and discussion about regulatory clarity, enforcement consistency, and the balance between innovation and compliance in the cannabis sector.
Long term, the dispute has broader implications, potentially setting precedents for how cannabis businesses and regulators interact and navigate the complexities of this evolving sector.
The outcome of Delta’s legal dispute is poised to have far-reaching consequences. It will influence not only the fate of Delta Extraction but also regulatory approaches and business practices in Missouri’s cannabis industry.
Delta has amended its suit before the Administrative Hearing Commission. The next hearing is expected in December.
