Industry stakeholders are alleging New York’s Office of Cannabis Management – the agency charged with overseeing the state’s legal marijuana market – is using enforcement powers to retaliate against those who speak out about its part in the flawed rollout of the new marketplace.
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Audio recordings, emails and social media posts, along with more than a dozen interviews with business owners and others, evidence why these operators are scared to talk – they’re afraid to lose or be denied a license, or experience “selective enforcement.”
“It seems we want to enforce on people who speak out,” said Ruben Lindo, an entrepreneur and founder of multistate cannabis brand Blak Mar Farms.
And OCM leadership is “doing nothing about it,” he said.
Though the worries have been an open secret within the Empire State’s cannabis industry for more than a year, the circumstances around the OCM’s first recall of a cannabis product, and what happened after, are now bringing these concerns front and center.
And several of the allegations revolve around a top state official who has been openly hostile toward people who disagree with OCM’s methods.
‘Making examples of bad actors’
Jenny Argie was thrilled to enter New York’s cannabis market in 2022 as one of the state’s first licensed processors, who convert the plant into edibles, vapes and topical ointments, among other products.
Like many in the nascent space, Argie – a cancer survivor – scrimped and saved to start Jenny’s, a company that specifically targets a wellness niche: sugar-free, vegan, kosher and organic gummies. She took out a second home loan to open her Hudson Valley facility and later turned down offers from large corporations hoping to buy into her business, she said.
Yet throughout the following year, Argie noticed the proliferation of illicit products entering the market with impunity.
She began speaking out, first in print and ultimately at a New York State Senate Subcommittee on Cannabis hearing in October of 2023, where she explained to senators how New York companies were importing illegal products and passing them off as grown in-state.
Jenny Argie, a licensed Adult-Use Conditional Processor, speaks before the NYS Senate Subcommittee on Cannabis on Oct. 30, 2023.
Legislators asked how she knew this. Argie didn’t answer at the time – but she had the information on good authority.
Those details came from Damian Fagon, OCM’s chief equity officer responsible for overseeing the social and economic equity initiatives laid out in the Marijuana Regulation and Taxation Act. (NY Cannabis Insider reached out to Fagon for comment on this article but was directed to the agency’s communications department).
Prior to the hearing, Argie had recorded a phone call with Fagon during which he explained that the agency was aware of the illegal practices but was choosing not to “start a full-fledged crackdown” yet because those actions “would further cripple the market.”
The office would be looking to “make examples” of bad actors by the first quarter of 2024, Fagon said on the call, which was reviewed by NY Cannabis Insider.
Fagon also discussed other infractions going uncorrected in New York’s market, such as deep-pocketed brands offering cushy deals to retailers in order to box out smaller brands.
Argie sent the audio to fellow processors, who were confused about why large brands were being allowed to engage in shady business practices at the expense of small actors.
When enforcement didn’t come, Argie sent the recording to NY Cannabis Insider, but requested not to be named as the source. Fagon’s comments were published in a November article about a top cannabis regulator describing the agency’s hands-off stance toward rule breakers.
The day after the story published, Fagon called a NY Cannabis Insider reporter, yelling, cursing and singling out Argie by name as the source of the leaked audio.
Damian Fagon, Chief Equity Officer at New York State Office of Cannabis Management, speaks to reporters next to marijuana plants for the adult recreational market hanging in a drying room at a farm in Suffolk County, N.Y., Tuesday, Oct. 4, 2022. (AP Photo/Mary Altaffer)
“I know it was Jenny,” Fagon said during the call. The reporter did not divulge the source of the recording.
Less than a month later, on Dec. 12, 2023, the OCM sent out a nationwide press release about its first and only cannabis recall to date.
The products in question were Argie’s.
Public health and safety
A big part of New York’s rationale for legalizing cannabis in 2021 was rooted in the idea of public health and safety, and the OCM has spent millions of dollars to hammer that point home and push consumers toward the legal market.
Every cannabis product must be tested by a state-certified laboratory to ensure it’s free of harmful ingredients and its exterior label matches what’s inside the package.
OCM is expected to review those lab results before allowing a product to head to store shelves, but ultimately the agency holds processors like Argie responsible for deciding whether their products pose a public health risk.
Charles King, left, CEO and founder of Housing Works, New York's first legal cannabis dispensary, smiles as Chris Alexander, right, executive director of New York State Office of Cannabis Management, takes a whiff of one of the first cannabis product made during the dispensary's kick-off press conference, Thursday Dec. 29, 2022, in New York. (AP Photo/Bebeto Matthews)
“It is the responsibility of the licensee to consider … any risks to the health of consumers,” according to OCM testing guidance.
As extensively documented by NY Cannabis Insider, there are numerous products on New York shelves that contain rates of bacteria, yeast and mold at more than 100 times what’s allowed under state medical rules – posing a potential “serious health threat” to recreational consumers, according to experts. None of those products have been recalled.
Additionally, a NY Cannabis Insider investigation published last March found that the majority of the best-selling weed available in the nascent marketplace at the time contained drastically lower THC than advertised.
In response, the OCM shifted its testing standards – but never recalled any of those products, either.
The agency’s action against Argie in December stemmed from the fact that one of her gummy products advertised a one milligram higher potency on the label versus what was in the box.
Argie fixed the issue but didn’t retest the products, which triggered the recall, according to the OCM. The remediated products passed inspection after testing, Argie said, but by that point, the damage had been clocked.
Argie’s brand, Jenny’s, was on the evening news in New York City. The national outlet Newsweek headlined their coverage, “Weed Gummies Recall Sparks Warning Not to Eat Them.”
Reporters hounded Argie throughout the following days.
“It was just all of a sudden, all of these people calling me for comments, my name in the news and I didn’t know what to do,” said Argie. “People questioned whether my product was safe …. We remedied it immediately.”
For the state’s first and only recall to publicly shame a company for this level of an infraction – when there are far more egregious and public examples of worse actors – struck many at the time as concerning.
“I’ve been in the industry a long time and have seen more egregious cases of negligence or even downright malfeasance,” said Lindo of Blak Mar Farms. “Is this targeted or an example of selective enforcement?”
Ruben Lindo is the founder of Blak Mar Farms and a former director of the Hudson Valley Cannabis Industry Association. (Courtesy, Ruben Lindo).
One former OCM official granted anonymity to protect their job also said the timing of the recall around Argie’s public comments was “suspicious.”
To date, none of the brands mentioned by Fagon in his conversation with Argie have been recalled.
“Inspections and recalls are part of the everyday work required to ensure our cannabis industry is producing safer, tested products,” said OCM Executive Director Chris Alexander in a statement. “We are proud of the diligent work our compliance team performs day in and day out to uphold State standards.”
In comparison
NY Cannabis Insider reviewed multiple products available on legal dispensary shelves in early March.
There are cannabis beverages that don’t have child-resistant packaging, like safety locks on the cap, despite one of the leading causes for cannabis-related emergency room visits being children ingesting edibles thinking they were candy.
There are also products with missing or doctored certificates of analysis (laboratory results required to be printed on packaging) that have been reported to OCM’s compliance division – but never recalled.
When presented with these findings, OCM compliance staff said that recalls and enforcement were based on a rolling schedule, and that the agency uses a sliding scale of severity when deciding which products to go after.
Argie’s infraction was “very minor,” said John Vavalo, president of the Association of New York Cannabis Processors. “She admitted she was wrong, she recalled the products and she took care of it, but it was not a risk to health and safety.”
“The fact is, we know so many other things that are much worse: people bringing in illicit products to the market, and they chose to hit Jenny hard,” Vavalo said.
Yet that was just the start.
Other incidents
As Argie’s recall began circulating through social media, other concerning emails, social media posts and text messages with the OCM came into focus.
For example, Jeanette Miller, a licensed cannabis cultivator near Buffalo, made headlines after she brought a noose to a September Cannabis Control Board meeting as a symbol of the suicidal thoughts she and others were experiencing due to the financial stresses of the market.
The gesture was controversial in a room where many participants were minorities, and it upset the OCM enough that the agency redacted the incident from its September meeting minutes (the agency later reversed its decision, in part, at the behest of local journalists.)
Then, in January, Miller received an OCM email regarding her license renewal process. The phone number for the licensing department, included at the bottom of the email and verified by NY Cannabis Insider, directed her to a suicide-help hotline.
“It was triggering all over again,” said Miller, who has been vocal about her mental health journey.
“I was shocked. I couldn’t believe they would do that,” she said. “I had to call the number twice just to make sure it really was what I thought it was.”
In early February, Joe Rossi, the cannabis practice group leader at lobbying and consulting firm Park Strategies –– which represents a number of cannabis businesses –– criticized the OCM on Twitter for its lag in licensing.
Fagon, the chief equity officer, took a screenshot of the tweet and posted it on his personal Instagram with the comment: “Please stop twisting yourself in knots so publicly because you don’t understand the industry.”
It made Rossi nervous, he said, that a public official would openly take a stance against him, for fear that he or his clients would be treated unfairly or viewed unjustly in the future. He submitted a report of the incident to the New York State Inspector General.
“To go on your Instagram during the work day no less, put down the social media tools,” said Rossi. “Focus on your job.”
Rossi said he received multiple text messages from small business owners and industry players after the social media spat.
“And there is why I’m afraid to speak out,” read one of the messages, verified by NY Cannabis Insider.
Argie received similar messages after her recall.
“I assume it is because you spoke out at the Senate hearings. Which makes the rest of us terrified to criticize,” read one.
“I feel that they are going to target my clients if I speak out too much,” read another.
Around this time, Argie – who is on the board of the Association of New York Cannabis Processors – wanted to go on the record about why she had leaked the audio: in part to clear her name. The December recall damaged her reputation, and dispensaries had reached out inquiring whether her products were safe.
It wasn’t an easy decision.
“It’s tough because I am scared –– but I am more scared not to have integrity and speak my mind,” Argie told NY Cannabis Insider in early February. “I am fully aware that after this article comes out I stand to be raided, for more scrutiny to be placed on my product.”
NY Cannabis Insider notified the OCM on Feb. 28 that Argie wished to go on the record and to ask for a comment.
Six days later, Argie’s fears were realized.
Stop work
On March 5, the OCM conducted an unscheduled inspection at Argie’s Hudson Valley facility, this time issuing a full stop work order and quarantining all of her products.
The inspectors zeroed in on a piece of machinery that uses a solvent (chemicals that extract THC and cannabinoids from dried flowers) that was not OCM-approved.
The solvent – R134a – is used in a handful of states, including at a facility in New Jersey, but not in New York. It was approved by the FDA in 2001, and the European Union unilaterally approved the chemical for use in its burgeoning hemp market. Its pharmaceutical version is commonly used in children’s inhalers.
“It’s a cleaner, safer technology,” Argie said.
Additionally, the solvent was listed on Argie’s packaging, which had been reviewed under the previous recall.
So, when inspectors visited her facility last week, one of Argie’s employees asked them why this issue wasn’t raised prior.
“Why didn’t OCM tell us before? Why didn’t anyone look at the packaging if you were looking so closely at stuff,” said the employee in a video reviewed by NY Cannabis Insider. “We could have fixed this months ago.”
“I wish they would have done that,” one of the inspectors responded. “But I guess it wasn’t on their radar at that time.”
Stop orders are issued when violations pose an immediate risk to public safety or the safety of employees, or when the business owner is non-cooperative with officials, according to state regulations.
Jason Centolella, Argie’s attorney, said the stop work order is not warranted.
“Based on our review of the facts, the actions of OCM are not consistent with New York law and are retaliatory. We plan to vigorously pursue all of Jenny’s rights and remedies,” said Centolella.
One processor, speaking anonymously out of fear of retaliation, said they had considered switching to the same machine Argie used but did not because it was too costly – not because it was not approved.
The OCM denied Argie’s formal request on Monday to lift the stop order. In documents, the office said Argie would have to provide additional material and evidence about the solvent’s safety.
“Licensees have a duty to comply with New York State laws and regulations,” said OCM’s Alexander. “The operator in question failed to do so on two separate occasions, and in both instances, when OCM became aware of non-compliance, our regulators acted swiftly and according to laws and regulations.”
In the aftermath of the recall, Argie’s products have been put on quarantine, meaning they cannot be on shelves until the state conducts an investigation into their safety. Her cash flow has stopped and she is teetering on the brink of default, she said –– after an already drawn out and chaotic start to the market’s rollout.
“If this doesn’t lift, I will have to sell my facility and my house. I have about a week of runway without any sales,” said Argie. “Not only will this kill my businesses, but it will destroy my reputation.”
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