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Michigan's Cannabis Regulatory Agency Takes Disciplinary Action against Mt. Morris Processor

July 6, 2023 – In order to ensure the health, safety, and security of the public and integrity of the state’s marijuana business operations, today the Cannabis Regulatory Agency (CRA) announced disciplinary action against Sky Labs, LLC, located at 9421 N. Dort Hwy, Mt. Morris, Michigan 48458. Sky Labs will surrender its medical processor license, have stringent compliance requirements placed on its adult-use processor license, and must pay a $100,000 fine.

“When businesses don’t follow the laws and rules that govern the cannabis industry, it is important that they be held accountable for their actions,” said CRA Executive Director Brian Hanna. “It is vital to the health and safety of the public that all licensees in Michigan’s cannabis industry abide by the rules and laws that are in place to protect the public.”

The stringent compliance requirements contained in the consent order and stipulation require Sky Labs to do the following regarding its adult-use processor license:

  • Submit to a full onsite audit conducted by CRA staff and correct any deficiencies.
  • Provide a copy of all standard operating procedures to the CRA.
  • Provide a copy of all logs maintained on a monthly basis, for 12 months.
  • Submit payment for the $100,000 fine.

If Sky Labs fails to timely comply with the terms of this order, its license will be suspended until compliance is demonstrated. The details of Sky Labs’ violations can be found in the disciplinary documents issued by the CRA (link, link, link, link).

To summarize, in part:

In spring 2021, Sky Labs had marijuana vape cartridge concentrates fail safety compliance testing for banned chemical residues. In addition, Sky Labs had a product fail safety compliance testing for Vitamin E Acetate, a target analyte banned for inhalation by the Food and Drug Administration (FDA). During the investigation to determine the cause of these failures, the CRA discovered the record of formulation used in the production of the concentrate did not include the minimum requirements and did not include the test results for the terpenes used in the concentrate.

In September 2021, during an inspection, the CRA observed eleven employees actively working in the production of marijuana products who were not trained on safe food handling and were not in the possession of food handling training certificates. The CRA also observed Sky Labs producing, packaging, and storing vape cartridges in a back trailer without a working video surveillance system. In addition, the CRA observed pre-rolls without statewide monitoring system (Metrc) tags affixed to the pre-rolls, bags, or storage bins. This marijuana product could not be identified on any manifest or in the statewide monitoring system as being sourced from a licensed grower.

In December 2021 and January 2022, CRA audits were performed for multiple Metrc packages tags (packages) from Sky Labs’ inventory; these packages previously received full compliance testing. The packages tested first were not the same packages that were tested for the second time, and/or the packages were not in the same condition at the time of the second testing, even though all the products contained in the packages were sampled from the same Metrc package tag.

In June 2022, Sky Labs distributed Chewii Sour Cherry Edibles to employees of the adult-use processor establishment. Ten employees each received one package containing 20 pieces each. Sky Labs admitted the packages were mislabeled and as a result, were distributed to employees as trade samples. The labels on the edibles displayed a large sticker showing “200 MG CBD” and Sky Labs did not place a THC amount or modifier anywhere on the packages. An employee provided the edibles to her 4-year-old child. The child consumed two edibles which contained 20 mgs of marijuana. The child became seriously ill and was hospitalized due to adverse reactions to the marijuana edibles. A police report was filed with the Davison City Police Department and an investigation was opened with Child Protective Services