ALBANY, N.Y. (NEXSTAR) —The New York State Office of Cannabis Management filed multiple charges against Omnium Health, a licensed cannabis processor and distributor, for allegedly letting unlicensed businesses illegally operate under its legal license. This alleged “rent-a-license” or “reverse licensing” scheme sparked a statewide recall of all products under the Omnium banner.
Stephen Geskey, OCM’s Deputy Executive Director of Labs, Compliance, and Licensing, said “This is a textbook example of reverse licensure.” The alleged violations include:
- Aiding and abetting unlicensed processing
- Material misrepresentation
- Failure to disclose substantial changes in business operations
On Monday, OCM issued a notice of pleading against Omnium Health, also known as Omnium Canna. That notice of pleading accuses Omnium of renting out its processing facilities and state-issued license. Unlicensed operators then produced and packaged cannabis products that were sold in-state, according to OCM.
The agency’s Trade Practices Bureau started investigating in February by reviewing inspection and audit records, contracts between Omnium and the unlicensed groups, and witness testimony. Felicia Reid, OCM’s Executive Deputy Director, said that the moves would represent “a blatant breach of the licensing rules designed to ensure transparency and fairness in the legal market.” She added that state cannabis laws clearly explain that licenses are not transferable and that only licensed operators can legally produce and distribute pot.
OCM said those unlicensed groups had an “unearned backdoor” into New York’s regulated marijuana market, undermining the integrity and equity in the process. They offered proof in the form of photos, including packaging labeled “Omnium [doing business as] MFused.” Investigators said that MFused was among the businesses illegally renting the license and premises.
Other photos showed unlabeled THCA, a white powder investigations aid was used to increase potency. OCM said there was no traceability for these materials in the form of a batch ID, so they’re difficult to track in the legal supply chain.
OCM wants the following penalties:
- Revoking Omnium’s processor and distributor licenses
- Banning them from future licenses or work in New York’s weed industry
- Fines based on estimated revenue from the sale of the unauthorized products
- A recall to remove everything made by unlicensed processors
- Destruction of all illegally produced products
James Rogers, Director of the Trade Practices Bureau, said, “This kind of cheating robs compliant businesses of their right to compete in a fair market.”
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