ST. PAUL, Minn. — Minnesota lawmakers want to crack down on one of the state’s medical marijuana companies whose former executives have been charged with illegally shipping $500,000 of marijuana oils to New York, pushing legislation allowing regulators to revoke the manufacturer’s license and levy a huge fine.
County prosecutors last month charged two top executives at Minnesota Medical Solutions with two felonies, alleging that they collaborated in late 2015 to ship more than 5 kilograms of concentrated marijuana oil from Minnesota to New York, where a subsidiary company faced a product shortfall ahead of New York’s January 2016 start to legal sales. The parent company, Vireo Health, is licensed to sell medical marijuana in both states, but it’s a federal and Minnesota crime to ship controlled substances across state lines.
Neither Laura Bultman, who was Minnesota Medical Solutions’ chief medical officer, nor Ronald Owens, its chief security officer, work for the company anymore, and the company has stressed the former employees acted against both state law and company policy. But while the ongoing court case has caused some alarm among public officials, state regulators have little recourse aside from hitting the employees with small fines or deciding not to renew the company’s license in December.
So several top Republicans who are part of the majority in the Legislature are pushing to give the state explicit authority to revoke a manufacturer’s license and hit the company with a $1 million fine and stiff penalties. They could eventually become law as part of a massive health care budget. Some lawmakers who supported the legislation that legalized medical marijuana sales in 2014 said Thursday they’re incensed that one of the companies entrusted with manufacturing and selling medical marijuana allegedly broke the law so blatantly.
“This was a big risk for some of us. We wanted it done well, and we need everybody involved with this to hold themselves to the highest standard,” said Sen. Michelle Benson, a Republican who backed medical marijuana legalization but is now behind the push to strip one of its licensed manufacturers. “The people responsible for executing it have put us in an incredibly difficult place.”
A spokesman for Minnesota Medical Solutions declined to comment on the bill. An attorney for Bultman said he’s seeking to have the case dismissed, while Owens’ listed lawyer did not respond.
Minnesota’s 2014 law made its program among the strictest of the more than two dozen states that have legalized medical marijuana, limiting availability to patients with just a handful of serious conditions and banning the plant from being sold or used — only marijuana oils, pills and vapors are allowed.
Minnesota Medical Solutions, or MinnMed, was chosen as one of two licensed manufacturers in late 2014. Its parent company has slowly won contracts in New York and Maryland while eyeing future expansions in Pennsylvania, Georgia and elsewhere.
The charges allege Bultman and Owens drove 5 kilograms (11.02 pounds) of marijuana oil to New York in an armored truck, then entered faulty information in the database that tracks shipments, suggesting the oil was taken to a waste facility to be destroyed. Investigators said they obtained text messages in which Bultman repeatedly referred to a specific kind of oil as “Christmas red.”
An early December 2015 email from a New York facility employee that was obtained by investigators read: “Laura is here today with Christmas presents from MN.”
Republican Rep. Nick Zerwas also voted to legalize medical marijuana sales in 2014 but authored the House bill that could hit the manufacturer with a huge penalty and kick them out of the program.
“We don’t think that type of action is excusable and should be allowed to continue,” he said.
It’s unclear whether state regulators feel as strongly about the case or if they would exercise the authority to revoke the company’s license. The Office of Medical Cannabis had sought wider latitude to punish the companies it regulates for legal missteps earlier this year. Director Michelle Larson said they’re withholding judgment on MinnMed until the court cases play out and its application for renewal — due in late May — comes through.
“We’re not oblivious to the criminal investigation going on,” Larson said. “But those are charges, not convictions at this time.”
But removing a manufacturer could further destabilize a fragile program, where registrations haven’t kept pace with projections, leading both companies to post millions of dollars in losses in the first years of legal medical marijuana sales. Fewer than 5,000 patients are currently actively registered to buy the medicine, according to state data.
Benson said a heavy fine against the company could be used to help woo a new manufacturer into the market. But she conceded that’s a challenge given the second manufacturer, LeafLine Labs, would have a monopoly on medical marijuana sales for months or more.
“We’re on the horns of a dilemma,” she said.