The legal fine came to the Cura Partners Inc. in a stipulated settlement with the Oregon Liquor Control Commission, in which Cura admitted to mislabeling 186,152 units, including: the Select brand vape products that made it attractive to Curaleaf Holdings, and the Massachusetts company set to acquire Cura. Some of the products failed to note they contained botanical terpenes, considered a flavoring agent distinct from cannabis-derived terpenes, and violated a state ban on flavored THC vapes that was in place for several weeks last fall. Although, most moved through the market well before then. Also, some products did not reveal the addition of MCT oil, commonly used in vape products.
OLCC investigators discovered the labeling problems in early November, while the flavor ban was in place. Even as the company was in discussions with the OLCC over the issue, Cura posted on Instagram that its “flagship Select Elite uses only cannabis distillate and cannabis terpenes.”
The OLCC misrepresentations led to a $10,000 fine, to go along with the $100,000 fine for mislabeling. The settlement also includes a 34-day license suspension. OLCC Executive Director Steve Marks said the agency considered doing a recall in early November when the problems were discovered, given that the Select products were in violation of the vape ban. A judicial stay on the ban quickly followed, and it wasn't clear to the OLCC that the products posed a provable health risk — like a pesticide violation, for example — needed to bring a recall.
The OLCC left it to Cura to work to remove the products from the market, a move that Marks said might have been a mistake. “In retrospect OLCC could have and should have done more,” he said.
Cura, which has more than 500 employees across several states, said the problems were not intentional, a view the OLCC accepted. “This was a communication problem,” Amy Margolis, an attorney representing Cura, said in a Nov. 18 email to the OLCC obtained by the Business Journal through a public records request.
“Cura is, as you know, a large company with many employees each working in different departments and at different locations. In this case what we think happened is that an employee (or employees) in the manufacturing connex decided to add." Amy Margolis.
Over the course of the investigation, the OLCC determined the violations didn't rise to the level of license cancelation. When Cura signaled to the OLCC that it wanted to work toward a quick settlement in order to move the Curaleaf deal along, the agency responded by prioritizing the matter. Curaleaf announced earlier this month that it expected the long-delayed closing would happen by Feb. 1. The only outstanding issue, it said, was the transfer of Cura's Oregon license. The mislabeling case wasn't the only thing standing in the way of that, but it was a big hurdle that would have to be cleared. “I think it was appropriate (to move fast on the issue),” said OLCC Commissioner Matt Maletis, who joined his colleagues in unanimously approving the settlement on Thursday.
“It’s obviously a substantial fine, reflecting our intention to strongly enforce our regulations. But we also wanted to recognize that Cura provides hundreds of living-wage jobs and we need to be responsive to companies as they evolve and grow and try to do business in Oregon. The fine is the largest ever against a cannabis company by several multiples," OLCC officials said.
The previous high fine of any sort by the agency was $80,000 against Walgreens for not being compliant with bottle bill redemption requirements in July 2017, according to the OLCC.
Portland Business Journal Cura Partners Inc.
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