For the second time in just five months, Michigan’s cannabis regulator has leveled serious accusations against Sky Labs, a cannabis processor based in Mount Morris. The company is alleged to have acquired untracked raw materials from unlicensed suppliers, failed to properly record them in the state’s cannabis tracking system, Metrc, and mixed untested materials into new products.
The allegations, outlined in a formal 10-count complaint by the Cannabis Regulatory Agency (CRA), could lead to severe consequences for the company. These include potential suspension, revocation, restriction, or even the refusal to renew its business license.
Unlicensed Acquisitions and Untested Materials
At the center of the controversy is the claim that Sky Labs acquired over 1 million grams (approximately 2,000 pounds) of hemp isolate from an unlicensed supplier. The CRA asserts that none of these batches underwent testing nor were certificates of analysis (COA) provided. A COA is essential in the cannabis industry, offering a detailed breakdown of a product’s composition, including its cannabinoid content, contaminants, and other critical information.
Failing to test the materials or provide a COA raises significant public health concerns, as untested products could contain harmful substances. The CRA emphasized that such actions undermine the state’s strict cannabis regulations designed to protect consumers.
The Role of Metrc and Tracking Failures
Sky Labs is also accused of neglecting its obligations in Metrc, Michigan’s seed-to-sale cannabis tracking system. This system is a cornerstone of the state’s regulatory framework, ensuring that all cannabis products are properly documented from cultivation to sale. By failing to account for the untracked materials, Sky Labs allegedly bypassed a critical layer of oversight.
Metrc violations are considered a major infraction. Regulators view any lapse in compliance with this system as a threat to the transparency and safety of the state’s cannabis market.
Sky Labs’ Business at Stake
Sky Labs operates as a vertically integrated cannabis company, producing and selling a range of products such as edibles, vape cartridges, and flower strains. Its significant presence in Michigan’s cannabis industry adds weight to the current allegations.
The CRA’s complaint outlines potential penalties that could fundamentally disrupt the company’s operations:
- Suspension of its business license, halting operations temporarily.
- Revocation of its license, which would force the company to cease operations entirely.
- Restrictions or non-renewal, limiting or outright ending its ability to operate legally in the state.
These penalties are not uncommon for businesses found in violation of Michigan’s cannabis regulations. However, the scale of the alleged infractions has drawn significant attention to this case.
Broader Implications for Michigan’s Cannabis Industry
This isn’t the first time Sky Labs has faced scrutiny. A similar set of allegations surfaced just five months ago, signaling a potential pattern of noncompliance. Such repeated violations raise broader questions about the regulatory environment and enforcement in Michigan’s cannabis industry.
The CRA has ramped up enforcement actions across the state, targeting unlicensed operations and regulatory violations. This increased vigilance is aimed at maintaining the integrity of the legal cannabis market and ensuring a level playing field for compliant businesses.
| Key Allegations Against Sky Labs | Details |
|---|---|
| Acquisition of unlicensed hemp isolate | Over 1 million grams obtained from an unlicensed processor or distributor |
| Lack of testing and COAs | Batches not tested and no certificates of analysis provided |
| Violations of Metrc tracking system | Untracked materials and failure to log acquisitions |
| Mixing untested materials into new products | Alleged creation of new products using unverified and untested raw materials |
The CRA’s formal complaint represents a pivotal moment for Sky Labs and could serve as a cautionary tale for other cannabis operators. It underscores the importance of adherence to state regulations and the potential consequences of failing to meet compliance standards.
For Michigan consumers, the case highlights the critical role of oversight in ensuring the safety and reliability of products in the legal cannabis market.