00577368.1 BEFORE THE ADMINISTRATIVE HEARING COMMISSION STATE OF MISSOURI DELTA EXTRACTION, LLC, Petitioner, v. MISSOURI DEPARTMENT OF HEALTH AND SENIOR SERVICES, Respondent. ) ) ) ) ) AHC Case No. 23-0608 ) ) ) ) ) RESPONSE IN OPPOSITION TO EMERGENCY MOTION FOR STAY Petitioner Delta Extraction, LLC (“Delta Extraction” or “Licensee”) holds license number MAN000022 permitting it to engage in the process of manufacturing marijuana-infused products and prerolls for medical or adult use at a comprehensive marijuana-infused products manufacturing facility. 1 As a manufacturing facility licensee, Delta Extraction may purchase, possess and process marijuana product so long as it does so within the confines of Article XIV of the Missouri Constitution and the Department’s regulations. 2 Article XIV’s purpose is “to make marijuana legal ... and to control the commercial production and distribution of marijuana under a system that licenses, regulates, and taxes the businesses involved while protecting public health.” Article XIV intends to “protect public health by ensuring the safety of marijuana and products containing marijuana” and “ensure the security of marijuana facilities.” 1 19 CSR 100-1.010(15) 2 19 CSR 100-1.010 et seq. Electronically received - AHC - August 12 2023 02:38 PM 00577368.1 2 In furtherance of protecting public health, Article XIV requires all marijuana sold in Missouri to be cultivated in Missouri and all marijuana-infused products sold in Missouri to be manufactured in Missouri. 3 To ensure marijuana within the legal marketplace is cultivated and manufactured in Missouri, Article XIV requires a seed-to-sale tracking system that tracks marijuana from either the seed or immature plant stage until the marijuana or marijuana-infused product is sold to a permitted purchaser. 4 Article XIV authorizes the Department to establish rules permitting the immediate suspension or revocation of marijuana facility licenses “where there is a credible and imminent threat to public health or public safety.” 5 On August 2, 2023, the Department’s Division of Cannabis Regulation (“DCR”) issued Delta Extraction an Order of Immediate Suspension (“OIS”). The OIS notified Delta Extraction that DCR “determined there is a credible and imminent threat to public health” arising from the inversion of marijuana product and introduction of marijuana product into the regulated market that was not compliantly tested. 6 On August 3, 2023, Delta Extraction appealed the Department’s OIS. Delta Extraction now seeks an “Emergency Stay,” permitting it to continue the same operation, with the same operators, which led to DCR’s determination that there was a credible and imminent threat to public health. 3 Article XIV Section 4 (25)-(26) 4 Article XIV Section 4(1)(d) 5 Article XIV Section 4(4)-(a) 6 “Testing of each harvest lot or process lot shall be conducted such that there is assurance that all harvest or process lots are adequately assessed for contaminants and that the cannabinoid profile is consistent throughout.” 19 CSR 100- 1.110(7)A Electronically received - AHC - August 12 2023 02:38 PM 00577368.1 3 Delta Extraction’s extraordinary request for “Emergency Stay” should be denied. Licensing laws are in existence to protect the public. Johnson v. Missouri Bd. of Nursing Adm’rs, 130 S.W.3d 619, 645 (Mo. App. W.D. 2004). Delta Extraction may challenge the immediate suspension but to stay the suspension during that challenge elevates Delta Extraction’s pecuniary interest over the threat to public health posed by inversion and the introduction of untested marijuana into the regulated market. Moreover, recent events at the Delta Extraction facility indicate intentional interference in the Department’s investigation by removal of key evidence that could show regulatory violations and criminal activity. Staying the Order of Immediate Suspension would be highly prejudicial to the ongoing investigation of Delta Extraction’s practices which arises from a credible and imminent threat to public health. FACTS 1. The Department is charged with protecting public health by preventing the introduction of unknown and untested marijuana products into the regulated market. 7 2. Pursuant to Article XIV Section 2(4)(d), the DCR uses “a seed-to-sale tracking system that tracks marijuana from either the seed or immature plant stage until the marijuana or marijuana-infused product is sold.” 8 3. DHSS’ seed-to-sale tracking system vendor is “Metrc.” “Metrc” is short for "Marijuana Enforcement Tracking Reporting Compliance." Metrc is used in many other states that have legalized marijuana to track the production and sale of marijuana and marijuana products. 9 7 Affidavit of Brittany Kirkweg, ⁋ 5 8 Affidavit of Brittany K irkweg, ⁋ 6 9 Affidavit of Brittany Kirkweg, ⁋ 7 Electronically received - AHC - August 12 2023 02:38 PM 00577368.1 4 4. Metrc uses radio frequency identification technology to track cannabis plants and products. It monitors the movement of cannabis within a legal market with the use of plant tags featuring Unique Identifier (UID) codes. Metrc monitors the weigh, location and transfers of cannabis through cloud-based traceability system designed for regulatory agencies within a given state. 10 5. To protect the public, one of the issues the Department monitors is inversion. Inversion occurs when cannabis seeds, plants, or products made from them come into the regulatory market from outside the system. This can happen in several ways, including when cannabis seeds, plants, or products come from producers outside of Missouri’s system or when hemp-derived chemically modified (“converted”) cannabinoids are added to products. 11 6. Both types of inversion are strictly prohibited under the Missouri Constitution, rescinded regulations, emergency regulations, and new regulations. Article XIV Section 2.4; 19 CSR 100- 1.170(2)(E) and (F (emergency rules); 19 CSR 100-1.100; 19 CSR 100-1.170(2)(E) and (F). 12 7. Mandatory testing protocols of marijuana and marijuana products are strictly governed. 13 8. Marijuana and marijuana products within the regulated market are thoroughly tested. 14 9. Marijuana and marijuana products originating outside of the regulated market pose a threat to public health and safety because these products are not grown in a licensed 10 Affidavit of Brittany Kirkweg, ⁋ 8 11 Affidavit of Brittany Kirkweg, ⁋ 9 12 Affidavit of Brittany Kirkweg, ⁋ 10 13 Affidavit of Brittany Kirkweg, ⁋ 11; 19 CSR 100-1.110 et al. 14 Affidavit of Brittany Kirkweg, ⁋ 12 Electronically received - AHC - August 12 2023 02:38 PM 00577368.1 5 facility under the requirements and standards for safe cultivation, processing, and distribution of marijuana and marijuana-infused products by marijuana facilities, including health standards to ensure the safe preparation of marijuana-infused products. Mandatory testing may not address contaminants in marijuana product that is not cultivated in a regulated setting. 15 10. Conversion of cannabinoids may include the use of chemicals which are not normally found in marijuana products and are not identified pursuant to required mandatory testing. 16 11. New techniques for converting cannabinoids to intoxicating compounds are common and frequently evolve. These techniques cause changes at the molecular level, and even small changes in the structure of a compound or small amounts of unknown residual solvents can impact potency and effect resulting in an unsafe product. 17 12. Per Article XIV Section 2 4.(1)(a) and 19 CSR 100-1.020(3), the DHSS may immediately suspend all or part of the operations of a marijuana facility where there is a credible report of an imminent threat to public health or public safety. 18 13. Delta Extraction, LLC holds comprehensive infused-products manufacturing license MAN000022. 19 14. DCR determined there is a credible report of an imminent threat to public health that warrants immediate suspension of the licensee, Delta Extraction, LLC MAN000022. 20 15. Specifically, a report was received by DCR on June 30, 2023, from Andrew Mullins, Director of MoCann Trade Association. See DHSS Exhibit F. 21 15 Affidavit of Brittany Kirkweg, ⁋ 13 16 Affidavit of Brittany Kirkweg, ⁋ 14 17 Affidavit of Brittany Kirkweg, ⁋ 15 18 Affidavit of Brittany Kirkweg, ⁋ 16 19 Affidavit of Brittany Kirkweg, ⁋ 17 20 Affidavit of Brittany Kirkwe g, ⁋ 18 21 Affidavit of Brittany Kirkweg, ⁋ 19 Electronically received - AHC - August 12 2023 02:38 PM 00577368.1 6 16. Mr. Mullins stated licensees may be participating in product inversion and included a copy of an alert sent to Association members warning them of “nefarious products and inversion.” The notice cautioned all licensees and specifically manufacturing licensees about “companies and individuals reportedly attempting to skirt the Missouri rules through the introduction of unlawful biomass, distillate, Delta 8 and/or other THC commodities into the Missouri regulated system, also known as inversion... [and] attempting to commercialize Delta 9 distillate or other Delta 9 THC products produced from chemically converted hemp derived cannabinoids within a regulated industry. This process is known as isomerization, and in Missouri is strictly prohibited in both the emergency rules and the final rules.” 22 17. On July 26, 2023, Mr. Mullins provided DCR an inversion solicitation from an Oklahoma operator and reiterated his concern of ongoing inversion. 23 18. Following Mr. Mullins reports, DCR received a report indicating Delta Extraction was engaged in inversion of marijuana product. The reporter requested to remain anonymous due to concern about retaliation by Delta Extraction and other members of the cannabis industry. 24 19. DCR reviewed Metrc tracking data for Delta Extraction and other licensees for discrepancies that are indicators of inversion, such as increases in process lot measures at points in the production process when product measures should remain steady or decrease and final cannabinoid content that cannot result from the tracked cannabis content used to produce the final product. 25 22 Affidavit of Brittany Kirkweg, ⁋ 20 23 Affidavit of Brittany Kirkweg, ⁋ 21 24 Affidavit of Brittany Kirkweg, ⁋ 22 25 Affidavit of Brittany Kirkweg, ⁋ 23 Electronically received - AHC - August 12 2023 02:38 PM 00577368.1 7 20. DCR determined Delta Extraction’s product tracking data showed egregious discrepancies of the type that indicate inversion. 26 21. Specifically, data from Metrc shows unsupportable increases in product weight. For example: a. On December 15, 2021, Delta Extraction possessed Metrc package tag #1A40C0100000835000001033 (package #1033) which contained 2,928 grams of bud/flower material. On March 14, 2022, Metrc shows Delta Extraction processed the 2,928 grams of bud/flower from package #1033 into 223 grams of concentrate. The 223 grams of concentrate was then assigned the package #1A40C01000044C1000000001 (package #0001). On March 15, 2022, 4 grams of concentrate was used from package #0001 to create package tag 1A40C01000044C1000000003 (#0003) which increased the amount of distillate from 4 grams to 38,698 grams for an increase of 38,694 grams. When producing distillate from a concentrate the weight will always decrease. An indication of inversion exists here as the material (4 grams) has significantly increased in weight instead of decreasing (38,698 grams). In addition, this is an example of how a licensee may introduce untested and illegal marijuana into the Missouri regulated market through the statewide track and trace system. Once the untested and illegal product is in Metrc, the licensee may continue moving the illegal product to other Missouri licensees to make final marijuana products that will be sold to patients and consumers. 26 Affidavit of Brittany Kirkweg, ⁋ 24 Electronically received - AHC - August 12 2023 02:38 PM 00577368.1 8 b. On March 25, 2022, 1,100 grams of atomic cherry distillate was taken from Metrc tag 1A40C01000044C1000000003 (#0003). Vape cartridges containing 1,100 1-gram were made from the 1,100 grams of distillate to make package #1A40C01000044C1000000013 (#0013). Later the same day, the number of vape cartridges in #0013 was adjusted up in Metrc by 2,900 with the Metrc reason of “typing error” and a note by Licensee stating “recount”. It is not possible to create 4,000 1-gram vape cartridges from 1,100 grams of distillate. This is a clear indication of inversion. The source package (#0003) does not account for the additional material on March 25, 2022. In addition, this is an example of how the Licensee is introducing illegal marijuana into the Missouri regulated market through the statewide track and trace system. Once the illegal product is in Metrc, this allows the licensee to continue moving the illegal product to other Missouri licensees to make final marijuana products that will be sold to patients and consumers. c. On November 7, 2022, 27 Delta Extraction created Metrc package tag #1A40C01000044C1000003539 (#3539) using 5 grams of distillate that was originally sourced from Metrc tag #0001 to create 130,000 grams of Conte Distillate. The Licensee notes in the statewide track and trace system that Metrc tag #3539 is mixed with Conte CBD Distillate. The Licensee is attempting to provide an explanation for the increase in weight from 5 grams to 130,000 grams by notating that CBD is being added to the distillate. However, Metrc records show R&D/voluntary test results by two different certified testing licensees, that 27 NOTE: Paragraph 25 of the Affidavit references November 11, 2023, as the date Metrc tag #3539 was created. This date is a scrivener’s error. Electronically received - AHC - August 12 2023 02:38 PM 00577368.1 9 there is nominal CBD found in the distillate tested. Testing results show the CBD potency is extremely low for 130,000 grams of product consisting of 129,995 grams of CBD, and very high for THC potency for only 4 grams; CBD (2.42;ND mg/g); THC (883.24;792.29 mg/g). This is a clear indication of inversion as the R&D/voluntary test results do not correlate with the Licensee’s note that the added weigh is due to the addition of CBD distillate. If CBD was added to the distillate the test results would show a high potency for CBD and low or non- existent THC potency. In addition, this is an example of how the Licensee is introducing illegal marijuana into the Missouri regulated market through the statewide track and trace system. Once the illegal product is in Metrc, this allows the licensee to continue moving the illegal product to other Missouri licensees to make final marijuana products that will be sold to patients and consumers. 28 22. In addition, some of the data from Metrc showing unsupportable increase in product weight occurred after mandatory testing was conducted, which demonstrates Delta Extraction is permitting marijuana product to enter the regulated market without being tested pursuant to Missouri’s mandatory testing protocols. For example: a. On January 16, 2023, 2,915 1-gram vape cartridges were made from 2,624 grams of distillate to create package tag #1A40C01000044C1000005196. On January 17, 2023, this package was sampled for mandatory testing. On June 26, 2023, the Metrc package was adjusted by 100 vape cartridges with the Metrc reason “Typing Error” and a note in Metrc by the Licensee that stated, "During 28 Affidavit of Brittany Kirkweg, ⁋ 25. Electronically received - AHC - August 12 2023 02:38 PM 00577368.1 10 our comprehensive audit, one extra box was located in the back of the vault that was unaccounted for during the packages initial count." b. On July 14, 2022, 318 1-gram vape cartridges were made from 468 grams of marijuana product to create package tag #1A40C01000044C1000000939 (#0939). On July 14, 2022, this package was sampled for mandatory testing. On October 5, 2022, package tag #1A40C01000044C1000002003, from #0939 was adjusted by 40 vape cartridges with the Metrc reason “over/underpull” and a note in Metrc by the Licensee that stated, "Inventory Audit”. 29 23. The Metrc indicators are strong evidence of inversion. DCR is unaware of any legitimate circumstance in which volumes of marijuana product may exponentially increase at the points of the manufacturing process where tracking data shows those increases occurred. 30 24. Records of Delta Extraction’s activities in Metrc show pervasive irregularities to such an extent that DHSS cannot confirm any product originating from Delta Extraction has been compliantly tested. Testing relies on accurate process lot records and unaltered process lot amounts in order for testing of a sample to be representative of the entire process lot. 31 25. Extensive falsification of Metrc records and evidence of inversion indicate high level operational and managerial decisions inconsistent with ensuring public safety. 32 26. On August 2, 2023, DCR issued the OIS to Delta Extraction, LLC MAN000022 per 19 CSR 100-1.020(3)(A)4 and 19 CSR 100-1.020(3)(G)1. 33 29 Affidavit of Brittany Kirkweg, ⁋ 2 6 30 Affidavit of Brittany Kirkweg, ⁋ 2 7 31 Affidavit of Brittany Kirkweg, ⁋ 2 8 32 Affidavit of Brittany Kirkweg, ⁋ 2 9 33 Affidavit of Brittany Kirkweg, ⁋ 30; See Delta Extraction’s Emergency Motion for Stay, Exhibit A. Electronically received - AHC - August 12 2023 02:38 PM 00577368.1 11 27. Following the August 2, 2023 OIS, DCR has had many communications and conducted site visits to the Delta Extraction facility to check on whether evidence is being preserved, conduct its investigation, and make certain the facility does not pose a public health and safety risk. 34 28. On August 3, 2023, DCR conducted a site visit to the Delta Extraction facility to ensure the facility was secured pursuant to the Order of Immediate Suspension. 35 29. During the August 3, 2023 site visit, DCR took photographs of the interior of the Delta Extraction building, including products, security camera feeds, and computer hardware. 36 DHSS Exhibit A. 30. Events since the August 2, 2023 OIS demonstrate further non-compliance with the Department’s regulations: a. On August 7, 2023, DCR determined that Delta Extraction failed to maintain security cameras capable of being remotely accessed by the Department at all times, which is a violation of 19 CSR 100-1.090(1)(C) and cause for license revocation pursuant to 19 CSR 100-1.020(3)(A). b. On August 7, 2023, Delta Extraction reported they would need someone on site to restore the Department’s access. Delta Extraction did not report any issues regarding its own access. c. DCR was scheduled to conduct a site visit with Delta Extraction on August 7, 2023. Pursuant to Delta Extraction’s request, that site visit was delayed to August 8, 2023. 34 Affidavit of Brittany Kirkweg, ⁋ 31 35 Affidavit of Brittany Kirkweg, ⁋ 32 36 Affidavit of Brittany Kirkweg, ⁋ 33 Electronically received - AHC - August 12 2023 02:38 PM 00577368.1 12 d. At 9:00 p.m. on August 7, 2023, Delta Extraction notified the Department that there had been a burglary at the Delta Extraction facility. e. Delta Extraction also reported that there had been motion detection alerts from the facility that morning at 4:04 a.m., with motion detected at the window of the office and within the office. f. On August 8, 2023, DCR was informed that the only reported item stolen during the burglary was security equipment which maintained the video recordings within the facility and stored the facility’s access control information. It was reported by Franklin County law enforcement that a facility representative believed the suspect was possibly an employee attempting to destroy the security system due to an audit the state was conducting. g. DCR investigators observed marijuana extracts which could not be identified through Metrc. h. DCR investigators observed many packages with shipping labels indicating the transfer of products to and from other states. i. DCR investigators observed an exterior window was broken and unsecured. j. DCR investigators determined the path of travel from the broken window to the former location of the security equipment required passing by a large volume of marijuana and marijuana products, checks, and drone equipment. k. During the site visit, DCR took photographs of the interior of Delta Extraction’s facility. 37 37 Affidavit of Brittany Kirkweg, ⁋ 34 Electronically received - AHC - August 12 2023 02:38 PM 00577368.1 13 31. On August 7, 2023, DCR conducted a Webex meeting with Delta Extraction. The meeting was recorded. 38 See DHSS Exhibit H 32. During the August 7, 2023, Webex meeting, DCR provided additional information regarding the bases for the Order of Immediate Suspension to Delta Extraction. On August 8, 2023, DCR provided Delta Extraction this additional information in writing as well as a link to the recording of the Webex meeting. 39 See DHSS Exhibit H. 33. The Department’s investigation of Delta Extraction remains on-going. 40 34. The timing of security failures and facts of the burglary (product, checks, and drone equipment were bypassed in favor of stealing only the security equipment housing historical camera footage and facility access logs) indicate intentional interference in the Department’s investigation by removal of key evidence that could show regulatory violations and criminal activity. 41 STANDARD OF REVIEW The Administrative Hearing Commission has authority to hear the complaint and motion for stay. 1 CSR 115-3.320; 19 CSR 100-1.020(4). Stays of administrative agency action under Missouri law are treated like preliminary injunctions. State ex rel. Director of Revenue v. Gabbert , 925 S.W.2d 838, 839 (Mo. banc 1996). Delta Extraction must justify the “exercise of such an extraordinary remedy.” State ex rel. Director of Revenue v. Gabbert , 925 S.W.2d 838, 839 (Mo. banc 1996). The Commission, in analyzing whether Delta Extraction met its burden, must weigh four factors: (1) the likelihood that Delta Extraction will prevail on the merits; (2) the likelihood that 38 Affidavit of Brittany Kirkweg, ⁋ 35; DHSS Exhibit B 39 Affidavit of Brittany Kirkweg, ⁋ 3 6 40 Affidavit of Brittany Kirkweg, ⁋ 3 7 41 Affidavit of Brittany Kirkweg, ⁋ 3 8 Electronically received - AHC - August 12 2023 02:38 PM 00577368.1 14 Delta Extraction will be irreparably harmed absent a stay; (3) the prospect that others will be harmed if a stay is granted; and (4) the public interest in granting a stay. Gabbert , 925 S.W.2d at 839-40. Delta Extraction must provide evidence as to each of these factors. Delta Extraction must show that the probability of success on the merits and irreparable harm decidedly outweighs any potential harm to the Department or to the public interest if a stay is issued. Id LEGAL ANALYSIS A. The Likelihood of Success on the Merits Delta Extraction’s Emergency Motion for Stay fails to show that it is likely to succeed on the merits of the administrative appeal it brought on August 3, 2023, challenging the Order of Immediate Suspension. In fact, the Delta Extraction’s Motion largely serves to support the Department’s actions and does not refute the credible and imminent threat to public safety arising from the inversion of marijuana product and introduction of marijuana product into the regulated market that was not compliantly tested. Delta Extraction’s August 3, 2023 Complaint only challenges the Department’s August 2, 2023 Order of Immediate Suspension. 42 Therefore, Delta Extraction’s initial hurdle in obtaining a stay is demonstrating it is likely to succeed in meeting its burden of production and burden of persuasion that there is no credible and imminent threat to public health. Delta Extraction’s Emergency Motion for Stay fails to make such a showing, either by argument of counsel or the speculative assertions contained within the Affidavit of Rachael Dunn, the only evidence submitted with the Motion. 42 Delta Extraction’s Emergency Motion for Stay references the subsequent administrative hold DCR issued on August 4, 2023. Delta Extraction’s Complaint, filed the day prior to this administrative hold, does not challenge the administrative hold applicable to the distribution of Delta Extraction products pursuant to 19 CSR 100-1.180(2)(B)2. Electronically received - AHC - August 12 2023 02:38 PM 00577368.1 15 The Department’s Order of Immediate Suspension specifically tracks the regulation at 19 CSR 100-1.020(3)(G)(1) expressly permitting DCR’s actions here: An imminent threat to public safety includes, but is not limited to: ... B. A credible report, such as from law enforcement, that diversion or inversion of marijuana product is occurring at the licensed facility; C. A credible report that a facility’s practices are permitting marijuana product to enter the regulated market without being compliantly tested. Delta Extraction’s Motion references this regulation but omits the definition of an “imminent threat to public safety” justifying an immediate suspension. Although the conditions upon which an immediate suspension are permitted are stated in 19 CSR 100-1.020(3)(G)1, Delta Extraction’s Motion laments its lack of knowledge of what DCR knows and how it knows it. Delta Extraction cites no requirement that DCR provide it with investigative determinations which it may then address when an immediate suspension is imposed due to the threat to public safety. The regulation requires a credible report. DCR received a report from the executive director of the Missouri Cannabis Trade Association of inversion. DCR then received a specific report alleging inversion by Delta Extraction. DCR reviewed Metrc data for Delta Extraction and determined that its data indicate inversion and introduction of marijuana product not properly tested. 19 CSR 100-1.020(3)(G)1 is satisfied. The Department’s rules are unambiguous. Emergency Rule 19 CSR 100-1.170(2), effective February 3, 2023-July 31, 2023, states: (E) Any tetrahydrocannabinol in a marijuana product manufactured by a manufacturing licensee shall only be derived from marijuana cultivated in Missouri by a licensed cultivator; Electronically received - AHC - August 12 2023 02:38 PM 00577368.1 16 (F) Manufactured product may not contain chemical modification, conversion, or synthetic derivation of cannabinoids to produce intoxicating cannabinoid isomers, and all cannabinoids acquired from entities other than marijuana facilities for purpose of inclusion in marijuana product must be accompanied by a Certificate of Analysis at time of acquisition that identifies the testing lab that tested the product and lists the product’s ingredients; and (G) Manufacturing licensees shall track all ingredients used in any given manufactured product. The current rule states: (E) Any tetrahydrocannabinol, such as THC-A, Delta- 8, or Delta-10, in a marijuana product manufactured by a manufacturing licensee shall only be derived from marijuana cultivated in Missouri by a licensed cultivator; and (F) Manufactured product may not contain chemical modification, conversion, or synthetic derivation of cannabinoids to produce intoxicating cannabinoid isomers, including those created by heat or other process during use by a patient or consumer, and all cannabinoids acquired from entities other than marijuana facilities for purpose of inclusion in marijuana product must be accompanied by a Certificate of Analysis at time of acquisition that identifies the testing lab that tested the product and lists the product’s ingredients. Delta Extraction’s Motion admits it produced marijuana products using THC-A originating outside of Missouri but claims this practice stopped upon the effective date of the current rule. 43 This may be reasonably construed as an admission Delta Extraction was introducing tetrahydrocannabinol into the Missouri regulated market which does not derive from Missouri cultivation and is not subject to Missouri’s safety testing protocols. This is inversion and prohibited. Delta Extraction, while providing explanation of its inversion practices, claims it does not know why the OIS issued. However, pursuant to the regulatory requirements, Delta Extraction is sufficiently apprised of the grounds for the immediate suspension. 19 CSR 100-1.020(3)(G) 43 Delta Extraction’s Emergency Motion for Stay, ⁋ 46. Electronically received - AHC - August 12 2023 02:38 PM 00577368.1 17 requires DCR’s notice of suspension to “list the basis for a ... suspension.” In an email the same day it received the OIS, Delta Extraction quotes the OIS stating that DCR made its determination by reviewing the Metrc system. 44 Delta Extraction’s email makes it clear it was aware of concerns regarding its products even prior to the OIS. Delta Extraction admits that DCR provided a “detailed explanation about inversion” but continues to express confusion. 45 Perhaps this is because, Delta Extraction, in its exhibition of correspondence, fails to note that DCR provided both a written summary and the actual recording of the video meeting in which it was provided additional information about the OIS and next steps in the investigation. If the phone conference was somehow unclear, the written summary provided the details that Delta Extraction still claims to lack. This summary stated: To confirm the credibility of the allegations, DCR found data in the statewide track and trace system indicating inversion of marijuana product from outside sources. Information in the statewide track and trace system shows significant inconsistencies between marijuana product quantities and their corresponding package input quantities. To address #2, DCR found date in the statewide track and trace system (Metrc) demonstrating the Licnesee is permitting marijuana product to enter the regulated market without being compliantly tested. Information in the statewide track and trace system shows packages of marijuana product were increased in size by the licensee after mandatory testing, which demonstrates the product was not compliantly tested and also indicate inversion. 46 Delta Extraction asserts that it has not been given an opportunity to cure. The regulations specifically exempt the OIS from a required cure period. 19 CSR 100-1.020(3)(G). The purpose of the OIS is not remediation – it is to protect the public. While the immediate suspension will be 44 Delta Extraction’s Emergency Motion for Stay, Exhibit B at 3 45 Delta Extraction’s Emergency Motion for Stay, Exhibit E at 1. 46 DHSS Exhibit E. Electronically received - AHC - August 12 2023 02:38 PM 00577368.1 18 lifted “when the threat is eliminated,” determining the scope of the threat and its elimination is the responsibility of DCR, not Delta Extraction. That the threat is not eliminated cannot be reasonably disputed. In the few short days since the issuance of the OIS, critical evidence of potential regulatory and criminal behavior has been spoiled. The security equipment maintaining the video recordings within the facility and that stored the facility’s access control information have vanished. It was reported by Franklin County law enforcement that a facility representative believed the suspect was possibly an employee attempting to destroy the security system due to an audit the state was conducting on the company. Moreover, the substantial inversion indicated by the Metrc data indicates coordinated and intentional acts of inversion. DCR’s recent site visits identified substantial concerns, including marijuana extracts which could not be identified through Metrc and shipping labels indicating the transfer of products to and from other states. Delta Extraction should not be permitted to continue to operate while the investigation of these significant threats to public health and safety continues. The Motion does not show it is likely to prevail on the merits of its challenge to DCR’s determination that an immediate suspension was warranted due to a credible threat of imminent harm to the public. B. The Likelihood the Moving Party Will be Irreparably Harmed Absent a Stay DCR acknowledges that Delta Extraction is not producing or selling marijuana products while the OIS is in place and DCR conducts its investigation. However, Delta Extraction’s profits are not irreparable. “The primary purpose of an injunction is to maintain the status quo and prevent irreparable injury.” Walker v. Hanke, 992 S.W.2d 925, 933 (Mo.App. W.D.1999). To show Electronically received - AHC - August 12 2023 02:38 PM 00577368.1 19 entitlement to injunctive relief, a petition must plead facts that show (1) the plaintiff has no adequate remedy at law, and (2) irreparable harm will result if the relief is not granted. Id. Generally, the phrase “adequate remedy at law” means “that damages will not adequately compensate the plaintiff for the injury or threatened injury.” Id. “Irreparable harm is established if monetary remedies cannot provide adequate compensation for improper conduct.” Id. Glenn v. City of Grant City , 69 S.W.3d 126, 130 (Mo.App. W.D.,2002). Delta Extraction claims pecuniary impact arising from the OIS. According to Delta Extraction’s Motion, it claims, without evidence, it will be deprived of one million dollars of revenue per month should the stay remain. However, outside the scope of this matter, there is an administrative hold which will prevent the sale of products which are potentially a threat to public safety. 47 Delta Extraction’s claim of pecuniary impact, like the factors to establish a stay, requires evidentiary support for both the harm alleged and the lack of reparability. Here, Delta Extraction fails to provide any evidentiary support beyond the bare assertions in Ms. Dunn’s Affidavit. Delta Extraction fails to identify anything specific about its current financial state, position in the market, or other factors that would make the harms alleged irreparable. Delta Extraction does not meet its burden of demonstrating a substantial likelihood of irreparable harm. Moreover, Delta Extraction chose to seek licensure and operate a business in a highly- regulated industry in which the safety of its products is subject to governmental oversight and scrutiny. Insofar as Delta Extraction anticipates an impact to its profit margins due to the suspension of its operations, it cannot claim surprise or inequity, let alone irreparability. C. The Prospect that Others will be Harmed if the Commission Grants the Stay 47 Delta Extraction’s Emergency Motion for Stay, Exhibit D. Electronically received - AHC - August 12 2023 02:38 PM 00577368.1 20 Delta Extraction’s speculative and unsubstantiated risk of harm must be weighed against the profound and significant prospect Missouri consumers and other marijuana licensees will be harmed if the Commission grants the stay. When analyzing harm, it is important to note that the immediate suspension is “not the infliction of punishment, but rather the protection of the public.” Duncan v. Missouri Bd. of Architects, Prof’l Engineers and Land Surveyors , 744 S.W.2d 524, 538 (Mo. App. 1988). Inversion and non-compliance with testing procedures are prima facie threats of imminent harm justifying immediate suspension. 19 CSR 100-1.020(3)(G)1; See also Article XIV Section 2(3)(b), (25) and (26). This determination makes sense when the implications of inversion and failure to comply with testing procedure are understood. Marijuana and cannabis products can be contaminated or polluted by harmful particulates and chemicals. If particulates and chemicals come in from outside Missouri’s regulated system or are added after testing, these particulates and chemicals could end up in products for sale to the consumer with unknown potency and unknown harms. If problems arose with the safety of these products, finding the root cause would be difficult if not impossible. Moreover, inversion is in direct conflict with the intent of Article XIV to "remove the commercial production and distribution of marijuana from the illicit market..." Inversion accomplishes the opposite of this intent. Inversion feeds the illicit market by allowing what is produced by the illicit market to enter the regulated market. Consumers and patients are the most important but not the only ones harmed by the stay. Missouri’s regulated industry itself faces harm from the threat of inversion. According to Andrew Mullins, the Executive Director of the Missouri Cannabis Trade Association, it is important to be “vigilant” about inversion in order “to continue to keep bad actors out of this Electronically received - AHC - August 12 2023 02:38 PM