These issues “pose serious risks to public safety, market integrity, and the tax revenue framework that supports Colorado’s regulated cannabis industry.”

By Christopher Osher, ProPublica and Evan Wyloge, The Denver Gazette

This story was originally published by ProPublica.

Colorado regulators announced Monday that they plan to crack down on companies that sell cheaper, potentially dangerous, illegal hemp products as marijuana.

The state’s Division of Marijuana Enforcement said it had identified “compliance issues” that threaten to dismantle the marijuana industry in the nation’s first legal retail market.

These problems “pose serious risks to public safety, market integrity and the tax revenue framework that supports Colorado’s regulated cannabis industry,” the agency said in an industry newsletter.

An investigation by the Denver Gazette and ProPublica in January reported that despite Colorado being one of the first states to ban the sale of intoxicating hemp products, the legislature and regulators. he failed adopting many of the rules that other states have used to keep hemp products off the medical marijuana shelves.

Creating evaporative and edible liquid distillate from hemp is much cheaper than using marijuana, giving companies a competitive advantage.

But regulators say they are concerned that manufacturers are relying on toxic and dangerous chemicals to convert the non-toxic CBD compound that is predominant in hemp into THC, the psychoactive compound that makes people feel high. Regulators have banned this chemical synthesis, saying they fear chemical residues could remain in the finished product, putting consumers at risk.

Colorado manufacturers have taken advantage of loopholes in the state’s testing and enforcement system to continue using hemp to make products marketed as marijuana, even though doing so is against state law, according to regulatory studies, previous agency bulletins and testimony and lab results contained in several lawsuits.

In 2024, state investigators found that a popular brand of marijuana sold at dispensaries was not only derived from hemp, but also contaminated with methylene chloride, the chemical often used to convert CBD from hemp into THC. Marijuana is banned by Colorado regulators and banned for most uses by the US Environmental Protection Agency because it can cause liver and lung cancer and damage the nervous, immune and reproductive systems.

Ware House, the company that manufactured these vaporizers, relinquished its marijuana license in response to the investigation. Ware Hause’s owner, Thanh Hau, and the company’s lawyer declined to comment.

Congress passed a law last November that bans nearly all hemp products nationwide starting this fall, but it’s unclear how the government will enforce the ban, and hemp growers are reeling.

In December, President Donald Trump issued an executive order telling his aides to work with Congress to develop rules that could allow certain hemp products.

The Colorado Division of Marijuana Enforcement made the announcement Monday newsletter agency officials stated that they “identified and investigated evidence” that marijuana companies are using illegal practices and prohibited methods to manufacture products, instead of relying on marijuana, which is supposed to be monitored for safety.

The Colorado Hemp Association and the Colorado Hemp Education Association did not immediately respond to requests for comment.

Beyond safety concerns, the bulletin also noted that some marijuana manufacturers and growers are avoiding marijuana tax obligations through “a pattern of non-compliance” in sales operations they report to the state’s “seed-to-sale” tracking system, which tracks marijuana from the initial planting to the sale of flower, vapes and other products at dispensaries.

Companies misrepresent marijuana sales at nominal prices, in some cases as low as $1 per pound for unprocessed marijuana material, the newsletter said. Those products typically fetch more than $600 per pound on the market, depending on the category of marijuana, according to industry experts.

That fraudulent reporting has stolen millions of dollars in marijuana taxes from state and local governments, industry experts say, though no official estimate is available.

The agency said it will follow emergency rules to address these issues. The bulletin emphasized that suspicious and abnormal transactions and inventories detected by the state will prompt investigations. Companies caught using hemp or other illegal material passed off as marijuana face “immediate product embargo, license suspension or revocation, significant fines and law enforcement,” regulators warned.

The Denver Gazette and ProPublica have tried to track the anomalous transactions, but the Division of Marijuana Enforcement’s sales transaction records, even those that do not identify the companies, are not public.

Marijuana industry representatives met with the division’s regulators late last month to push for a more aggressive response to the agency’s hemp replacement, even though it could affect some companies in the industry. The representatives argued that bad actors are unfairly driving down prices and shifting the tax burden to manufacturers and growers who are trying to comply with the rules. The newsletter was released a couple of weeks after that meeting.

“The division is also considering additional changes to its testing and screening protocols” to detect illegal products and prohibited methods, and may require additional laboratory tests “if needed for products throughout the supply chain,” the agency’s bulletin said.

This article was produced in partnership with ProPublica’s Local Reporting Network Denver Magazine. Sign up for Submissions to receive stories in your inbox every week.

user photo WeedPornDaily.