When George Sadler, president of Platinum, a California-based cannabis product manufacturer that distributes products in both California and Michigan, started receiving messages on social media from its Michigan customers about vape cartridges not meeting their expectations, he suspected that counterfeits of the company’s products were being sold at unauthorized retailers, and he immediately started looking for ways to stay one step ahead of the counterfeiters.

“We started receiving stuff on social media saying, ‘Hey, I bought this cartridge [and] it doesn’t taste right. This isn’t a Platinum vape. What are you guys doing?’” Sadler told Cannabis Dispensary. “We … started to look around and started asking questions [like], ‘Where did you purchase this product?’ Then we realized, they were purchasing from stores that were not licensed and we had not done any distribution to. We had flown out there, and we started hitting these stores.”

Sadler’s main concern was consumer health. Generally, when cannabis products are counterfeited, untested product is produced on the illicit market and placed in an established cannabis brand’s packaging, which is duplicated and sold on illicit websites.

“You can actually go [online], type in ‘Platinum vapes,’ the packaging comes up, and you can purchase that packaging,” Sadler said. “Then it’s just a matter of getting some cheap, untested oil. … They don’t care what’s in it. They just fill it and know there’s a demand for it, and the stores that are not licensed have no issues with carrying that because it’s a selling point in their stores.”

These untested, counterfeit products, which could contain pesticides or other negative residuals, then end up in unknowing customers’ hands, which could be damaging for their health, as well as the brand’s reputation.

RELATED: Counterfeiting in Cannabis: How to Protect Your Brand

When Sadler discovered counterfeit Platinum products for sale in Michigan, he hired two full-time employees to check stores for knockoffs and report them to the state police. Law enforcement in turn created a task force that raided shops known to carry counterfeit products.

“It’s become a lot less in Michigan because Michigan doesn’t hold a very big unlicensed market, but it did, and it was extremely tough,” he said. “They were producing hundreds of thousands of cartridges a month.”

RELATED: Platinum Takes Control of Its Branding Through Store-Within-a-Store Concept

Counterfeiting is becoming more of an issue in Platinum’s home state of California, Sadler added, as the state has not been as strict with shutting down unlicensed retailers.

“People can then come in, duplicate what you’re doing, put it in the unlicensed stores, and then they make a profit, but you still have the issues of having uncontrolled material, unlicensed and untested, out for consumers to get,” he said. “We just do our best to make sure that if anything is out there with our name on it, it’s something that’s come through our facility … and we understand where it’s at.”

Photo courtesy of Platinum

To further its anti-counterfeiting efforts, Platinum recently partnered with Label Impressions, Inc., a packaging and labeling provider, and NeuroTags, a solution for counterfeiting protection, consumer loyalty and marketing, and supply chain visibility, to add NeuroTags QR codes to all of its packaging.

A customer can scan the code with their smartphone’s camera and pull up information about the product to verify its authenticity, such as the test results, where the product was manufactured and the date it was manufactured.

“That was our big thing, to allow the consumer to… know that what they’ve purchased is authentic, that it’s been tested,” Sadler said.

RELATED: Platinum Donates to Charitable Causes with Specially Branded Product Line

The code also provides access to exclusive videos about the product, and Platinum also plans to include a separate QR code on its packaging to allow customers to access its loyalty program.

“There’s another scratch-off QR code for our incentive program … that allows you to redeem points for free merchandise from Platinum Vape,” Sadler said. “There are just a bunch of things that you can purchase with points … —everything from bikes, backpacks, skateboards [and] hats.”

Platinum plans to launch its QR codes by the end of the month, and Sadler hopes the company’s approach to anti-counterfeiting measures will set a precedent for other brands.

“Security has become one of the forefronts of what needs to take place to move forward, and the unfortunate side of the … unlicensed market is that it’s thriving and it’s continued to put people in a bad position,” he said. “The nice thing about Label Impressions is the fact that you can take it into your own hands … and be able to directly look at that product via that system and know that yes, this is an authentic product."

An audit of the Minnesota Health Department’s controls and compliance has revealed several ways that the state’s medical cannabis program is not being correctly monitored, according to a Duluth News Tribune report.

The Office of the Legislative Auditor, the state’s legislative watchdog, examined the program’s operations from July 2016 through December 2018, the news outlet reported, and found the following issues:

• Failure to verify new patients’ doctors were licensed and in good standing;
• Poor record-keeping for parent and guardian eligibility for the program;
• Problems with oversight of patient fees collected by the state;
• Inadequate oversight of cannabis manufacturers, including failure to adequately track and test the drug prior to sale; and
• Too few controls to detect loss of medical cannabis by the manufacturer.

The audit did not include an evaluation of Minnesota’s two licensed medical cannabis operators, LeafLine Labs and Minnesota Medical Solutions, the Duluth News Tribune reported.

Department of Health Commissioner Jan Malcolm submitted a response to the audit, indicating that health officials agree with the findings and that they have made efforts throughout the past year to improve their oversight of the program, and that further improvements may require legislative action, according to the news outlet.

Minnesota lawmakers approved a medical cannabis law in 2014, and the program now has roughly 17,000 patients, according to the Duluth News Tribune.

The state has an extract-only cannabis market—smokable flower is prohibited—and has experienced slow growth, in part due to the high costs associated with producing cannabis extracts. Heading into the 2020 legislative session, the state’s medical cannabis businesses are advocating for the legalization of flower to make the program more affordable.

While such legislation has yet to be introduced, lawmakers are working on a proposal to legalize adult-use cannabis in the state after a similar proposal stalled in the Senate last spring.

Florida Sen. Jeff Brandes (R-Pinellas County) filed legislation Jan. 13 that would legalize adult-use cannabis in the state, according to a local NBC2 report.

The move comes after two political action committees suspended their efforts to get legalization initiatives on the state’s 2020 ballot.

The groups are now looking toward 2022 ballot initiatives, NBC2 reported, but Brandes hopes to legalize cannabis legislatively before then.

“We think the better place to have that conversation is through the legislative process and so in order to be able to do that you need a piece of legislation,” he told the news outlet.

Brandes’ bill aims to incorporate small businesses in an adult-use industry in the state, according to NBC2, and the legislation also includes expungement provisions for those convicted of simple cannabis possession.

After last year’s failed attempt at cannabis legalization in New York, Gov. Andrew Cuomo is renewing his push for policy reform in 2020.

The Democrat vowed to legalize adult-use cannabis this year in his Jan. 8 State of the State Address. The announcement was met with applause from state lawmakers, who tried and failed to pass the Marijuana Regulation and Taxation Act last summer, according to a Patch.com report.

Cuomo said during his address that it is an ethical imperative to legalize the cannabis in the state, according to the news outlet, and said he hopes to work with Connecticut, New Jersey and Pennsylvania to coordinate policy reform efforts. Cuomo also called for the State University of New York to form a cannabis and hemp research center, Patch.com reported.

“I think it’s a rehash of the momentum that picked up last year,” Joshua Horn, partner at Fox Rothschild, told Cannabis Business Times.

Cuomo first announced support for adult-use legalization in December 2018, when he called on the New York Legislature to pass legislation that would regulate and tax cannabis. He included a legalization plan in his 2019 state budget, but the proposal was ultimately removed.

A revised version of the Marijuana Regulation and Taxation Act was then reintroduced by lawmakers in May, but stalled in the legislature in June, at the end of last year’s legislative session.

The legislature did approve a cannabis decriminalization bill, however, which Cuomo signed and applauded in last week’s State of the State Address.

In October, Cuomo hosted the Regional Cannabis Regulation and Vaping Summit and met with the governors of Pennsylvania, New Jersey and Connecticut in an effort to coordinate their states’ cannabis policies.

Horn interprets Cuomo’s comments during the State of the State Address to mean that he is continuing to work on this coordinated policy reform effort.

“If you think about it, it makes sense because New Jersey, on its ballot for 2020, there’s a referendum for adult-use, and I would anticipate that the citizens in New Jersey will pass that,” he said. “It’s a race to have legislation, I think, in the tri-state area.”

Horn also anticipates that any legislative effort to legalize cannabis in New York will include further criminal justice reform.

“Whatever legislation should come to pass, [Cuomo] is pushing for a social equity component … to help those who are otherwise disadvantaged to get into the business,” he said. “I would envision that may look something like what happened in Illinois. … Illinois just went live [with adult-use] a couple weeks ago, and there’s a big social equity component there. Under its legislation, if you’ve had a prior drug conviction, or you were a disproportionately affected group or in a disproportionately affected area, that would give you ‘bonus points’ on the scoring of your application for an adult-use permit. I would envision something like that would be included in whatever legislative proposal that the governor pushes forward.”

New York’s 2020 legislative session kicked off Jan. 8, and this year’s attempt at legalization remains to be seen, although Horn expects a bill to be introduced soon in the wake of Cuomo’s comments. When legislation does materialize, however, it may hit snags in the legislature again.

“I like to believe that … the significant social equity component that will be in this legislation … might help to push [lawmakers] over the edge,” Horn said. “I think New York has a budget shortfall, and the question that I always pose to people when we debate this issue is, everybody wants service, but nobody wants to pay for it. Certainly, nobody wants to pay taxes for it, so states need a new source of revenue, and the governor was pretty clear that [cannabis] is going to be something that will be highly taxed. … I think you’ll have an appeal, or should have an appeal, to the legislature at large.”

If not this year, Horn said he anticipates adult-use legalization to pass in New York within the next 18 months to two years, especially now that Illinois has legalized.

“Illinois was the first state in the country to pass adult-use through a legislative process, and it passed by having this very significant social equity [component],” he said. “I think for states that want to have adult-use cannabis programs that are maybe a bit more conservative, I think maybe that’s the way you’re going to have to go. You have to recognize those issues in order to get broader support [and] get it to pass. … Illinois formed a resolution that could pass the legislature, so it would be intuitive that other state legislatures could take the same approach.”

And while there is still no definitive timeline for legalization in New York, Horn said if New Jersey legalizes adult-use cannabis through its ballot initiative this fall, it could speed up the process across the border.

“I’d like to believe it’ll be this year, but not seeing the legislation, it’s hard to … project it,” he said. “I do believe if New Jersey’s referendum passes, you’ll see this happen pretty quickly in New York."