Minnesota cannabis czar steps down over illegal products in her hemp shop

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Minnesota’s governor said his hiring of a hemp shop owner as the state’s cannabis czar was a mistake, and that he now intends to fill the position with a person who has a background in regulatory matters.

Erin DuPree resigned one day after she was appointed to head the state’s Office of Cannabis Management after the Minneapolis Star-Tribune newspaper reported that her business was selling cannabis products that were not compliant with state law. 

As director of the Office of Cannabis Management, DuPree would have been responsible for rules to guide the state’s legal marijuana market.

‘Hire a regulator’

Gov. Tim Walz took responsibility for the mis-hire. “I think by me focusing our team on finding someone inside the industry, it limited our ability to find maybe the right person,” Walz said Tuesday. “One of the big things I’m asking for is that we’re going to hire a regulator,” Walz said.

“We have a responsibility to assure Minnesotans that this emerging market will be safe, lawful, and well-regulated,” Walz added.

Loonacy Cannabis Co., which DuPree founded in 2022, marketed and sold illegal vapes and edible products, according to a review of the shop’s social media videos and online product listings by the Star-Tribune. The posts were later deleted.

Illegal products

Among the illegal products DuPree’s shop had offered were HHC, THC-P and delta-10, psychoactive products often produced synthetically from industrial hemp flowers. Lab results posted by Loonacy showed that some products contained elevated THC levels that are illegal as well as synthetic ingredients that are banned.

Many of the psychoactive hemp-derived products offered by DuPree’s shop may not meet requirements to be sold even in Minnesota’s licensed adult-use marijuana dispensaries, expected to open in 2025, according to the Star-Tribune report.

Loonacy was also marketing products that contain 10 milligrams of THC per serving and 150 milligrams per package. Minnesota law allows hemp-derived edibles to contain a maximum of 5 milligrams of THC per serving and 50 milligrams per package.

Loose rules

Minnesota first legalized hemp-derived THC products last year under fairly loose rules. The state’s cannabis law legalized both high-producing delta-8 and delta-9 THC derived from industrial hemp, which has led to such products being widely available to consumers. Usually relatively low in dose, the products are produced by putting CBD made from hemp flowers through a process in the lab. The lighter, mildly psychoactive products are preferred by some consumers as an alternative to marijuana, which naturally contains higher amounts of delta-9 THC.

Passage of the state’s recreational marijuana law this past spring followed a period of several years during which many synthetic cannabinoid products made from hemp were already being sold in the state due to a legal gray area and loopholes in the 2018 federal Farm Bill.

The law added penalties for non-compliant hemp-derived products, including a fine of up to $3,000 and up to a year in jail, for violators who sell edible cannabinoid products that do not comply with the limits on the amount or types of cannabinoids that a product may contain.

Setback for pot

The episode with DuPree is a setback for the state’s nascent marijuana industry, as it means delays in the development of the rules and the licensing process for marijuana growers, processors and retailers. (Hemp growers and processors are managed under the Minnesota Department of Agriculture).

Leili Fatehi, a pot legalization advocate who worked with state legislators on Minnesota’s recreational marijuana law, was among those who raised red flags upon DuPree’s appointment.

“Appointing someone without the necessary qualifications, who is an active member of the very industry they are meant to regulate, and who has shown a past disregard for compliance, is a textbook example of regulatory capture,” Fatehi said. “Such a decision risks establishing a culture of noncompliance at the very top levels of our state’s oversight of this nascent industry.”

DuPree, who was selected to head the Office of Cannabis Management from among 150 applicants, had said she’d planned to close Loonacy before starting the state job so she would be in compliance with Minnesota’s marijuana law, which prohibits the agency’s director from being a stakeholder in any cannabis business.

In addition to sales of questionable products in her shop, DuPree has faced financial troubles over the past decade, according to public records reviewed by the Star-Tribune, including several federal tax liens and lawsuits.

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