The Liquor and Cannabis Board in the state of Washington said Wednesday that it has reached a settlement with Unicorn Brands LLC over a “a year-long investigation and multiple Administrative Violation Notices (AVNs) for creating synthetically-derived THC from hemp and distributing it into the state-regulated cannabis market.”

The board said that Unicorn Brands “cooperated with the investigation” and ceased the conversion process that was under question. Last summer, the Liquor and Cannabis Board issued a policy statement that “made clear that synthetically-derived THC from hemp was prohibited under current rules and law.”

“This was an important case about the integrity of the legal cannabis system voters approved ten years ago and which today flourishes in Washington with a carefully controlled system of production, processing and selling of cannabis to adults,” Liquor and Cannabis Board chair David Postman said in an email to marijuana license holders in the state, reminding the businesses “of the prohibition on the sort of laboratory conversions involved in the Unicorn case.”

In October of last year, the board’s Education and Enforcement Division issued an Administrative Violation Notices to Unicorn Brands for four violations in its synthesis process: “1) Misuse of License, 2) Criminal Conduct, 3) Noncompliant Extraction, and 4) Traceability Failure.”

Under the terms of the “comprehensive settlement” between the two sides, the board said that Unicorn Brands “will not resume converting hemp into THC and brings an end to a lengthy and complex investigation.”

The board provided more details on the back-and-forth that preceded this week’s settlement.

“After extensive negotiations, the agency and Unicorn reached an agreement to settle these cases. As part of this settlement, the Enforcement and Education Division has agreed to fully withdraw the alleged criminal conduct charge,” the board said in a statement. “In exchange, Unicorn stipulates and fully admits to the remaining three violations: Misuse of License, Noncompliant Extraction, and Traceability Failure. Further, Unicorn has agreed to pay the standard monetary penalties for the three stipulated violations, accept forfeiture of the seized products, and waive further administrative review. Finally, Unicorn has agreed to the condition that “it shall not use its license to produce or manufacture Delta‑8 THC, Delta-9 THC, or any similar synthetically-produced THC from any hemp-based sources in the State of Washington unless explicitly authorized by a subsequent change in state law that allows the licensee to do so.”

The case highlights concerns surrounding the burgeoning Delta-8 market, with state regulators throughout the country struggling to stay on top of new (and, in some cases, illicit) products.

In its press release on Wednesday, the Liquor and Cannabis Board called on lawmakers in Washington to take steps toward providing greater regulation on that front.

“The next important step in protecting the public health is to eliminate the burgeoning market for Delta 8 products and other synthetically-derived products outside the regulated market. These gummies and other edibles are being illegally sold in convenience stores and online in Washington and across the country. We hope the 2023 legislative session will see action to assist in eliminating these illegal sales,” the board said.

Regulation of Delta-8 is far from the only pressing matter facing Washington’s cannabis industry. The state experienced a surge in armed robberies of cannabis dispensaries earlier this year, a problem attributed to the large sums of cash on hand at such retailers.

A spokesperson for the Liquor and Cannabis Board said in February that the agency recommended dispensary owners “hire armed security guards, make frequent cash deposits so there isn’t much cash available in shops, post signs in businesses explaining that staff don’t have access to much cash, clearly communicate safety guidelines with staff so they know what to do in the event of a robbery.”

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