Corey Black of Earth Keeper Cannabis holds a sample of marijuana given to her by a licensed grower allegedly tied to a Chinese organized crime group. Black submitted samples for testing, which found the weed to be contaminated with high levels of toxic insecticides and fertilizers. (Rich Abrahamson/Staff Photographer)
The cheapest ounce of marijuana at Corey Black’s organic medical dispensaries is $100.
Some of her competitors, meanwhile, have been charging as low as $40. According to Maine cannabis officials, much of that product is coming from grows operated by Chinese criminal groups.
“I get it. The economy is hard and people don’t have a lot of money. And if they can only afford a $40 ounce, then they’re gonna buy the [expletive] stuff,” said Black, the founder of Earth Keeper Cannabis with locations in Wilton and Winthrop. “But now we’re competing with illegal grows and people working with the black market.”
Business owners and state authorities say cheap, low-quality marijuana, some of it believed to be grown using forced labor and with banned chemicals, is becoming increasingly prevalent in Maine’s legal markets.
That has led to an increased risk that tainted weed is being sold on dispensary shelves and has also prompted some, like Black, to question whether their companies can survive.
“It has affected myself and my business, that you can buy flower so ridiculously cheap,” she said.
The medical industry uses a pen-and-paper system to log sales, making it easy to forge transactions or keep them off the books altogether. And Maine’s medical market is one of the country’s only legal industries that doesn’t mandate seed-to-sale plant tracking or testing for mold, pesticides and other contaminants.
Chris Urben, a retired U.S. Drug Enforcement Administration special agent, said what’s happening in Maine has happened across the country as Chinese crime groups have cemented a hold on America’s cannabis industries. He described the phenomenon as a “gray market” that exists between legal and illegal markets.
“They’re always going to beat the legit market. When they can, they’ll repackage it, rename it and they’ll move their product into the legit market. And they’re always going to beat it on cost,” said Urben, who spent much of his 25-year career investigating Chinese money laundering and cannabis operations, mostly outside of Maine.
A man passes Marijuanaville on College Avenue in Waterville, where ounces of cannabis were sold for $40. (Rich Abrahamson/Staff Photographer)
Local and federal police have said in interviews with the Portland Press Herald/Maine Sunday Telegram that the illegal weed from Maine is being sold in thousands of unlicensed dispensaries across California and New York that have sprung up in recent years.
But local cannabis business owners and regulators say more of that weed is finding its way into Maine dispensary shelves, too. And they aren’t necessarily using their own storefronts to do it.
“Illicit growers have attempted to sell them large batches of illicit, possibly contaminated cannabis at very low cost. (We’ve) fielded further complaints that some registrants are purchasing those products and offering them for sale to qualifying patients,” Maine Office of Cannabis Policy spokesperson Alexis Soucy said in an email last week.
“It is virtually impossible for the Office to verify whether medical cannabis and cannabis products are originating from and being sold within the regulated market,” she added.
All of this is happening amid what John Hudak, the office’s director, has described as a “mass exodus” of medical caregivers from an industry flush with “more cannabis than there is demand for it.”
Illegal cannabis growers tied to China have proliferated into legal markets in about a dozen other states from California and Colorado to Oklahoma and Oregon using a playbook designed to attract little attention, according to federal law enforcement.
“Most times when you have organized crime taking over one revenue stream from another, or in some way competing with it, there’s usually violence. There’s some sort of conflict. But you didn’t have that with this,” Urben said. “It was seamless. No one was getting extorted, no one was getting kidnapped.”
Josephine County Sheriff Dave Daniel stands amid the debris of plastic hoop houses once used to grow cannabis near Selma, Oregon, in 2021. State police officials later said foreign drug cartels that established illegal outdoor marijuana farms in the state expanded to large indoor grows. (Shaun Hall/Grants Pass Daily Courier via AP)
Now, local and federal agencies say, Maine has become one of the most attractive places in the country to launder illegal cannabis through legal markets. Records show hundreds of cannabis “grow houses” run by alleged Chinese organized crime groups were established across the state over the last five years.
That’s in part because the barrier to grow in the state’s medical market is low. But even once law enforcement began cracking down on them in late 2023, state records show many began joining Maine’s medical market. Chemical testing and police raids, however, indicate their product didn’t change.
The grows often operate outside of legal markets to avoid taxes and regulations, Urben said. But having the legal cover of being a licensed grower can stunt a police investigation.
In California, where Chinese cannabis farms cover acres of rural farmland, at least 60% of cannabis consumed in the state is grown illegally, a state study estimated last year. In Oklahoma, the price per gram of weed has cratered to the lowest in the nation as Chinese growers have flooded the legal market.
A massive cannabis farm in Wewoka, Okla., where local and federal law enforcement carried out a search warrant in April for allegedly entering the state’s legal cannabis industry through a fraudulent “straw ownership” scheme, according to police. (Courtesy of Oklahoma Bureau of Narcotics)
Maine has been no exception to that trend, Urben and other law enforcement officials said, particularly because it’s much easier to obtain a medical cannabis license than in most other states. Medical growers don’t even need to live in Maine to be licensed here.
Maine’s medical cannabis has no requirements on testing for mold, chemicals and other contaminants and tracking plants from seed to sale, even though such measures are required in the recreational industry. Efforts to enact regular testing have repeatedly failed at the state Legislature amid sharp opposition from the medical cannabis industry.
It’s also uncommon for Maine’s Office of Cannabis Policy to revoke licenses for caregivers, what the state calls those who grow medical marijuana. The agency says its job is to help growers become compliant before handing out punishments. And under recently updated regulations, caregiver licenses can only be revoked under specific conditions, including knowingly applying toxic pesticides. Most license revocations occur because caregivers are growing too many plants or not maintaining transaction logs.
Only a handful of Chinese growers have had Maine medical cannabis licenses revoked for funneling illegal cannabis into the legal market through what regulators have described as a “revolving door” of individuals and shell companies.
“They’re applying so they can have a ‘get out of jail free’ card, or what they perceive as a ‘get out of jail free’ card, to continue to do the operations that they’re doing,” Hudak, the state cannabis office director, told legislators in January.
Hudak did not respond to interview requests for this story. The office said in a statement that unless the Legislature codifies stricter statutes on issuing caregiver licenses, the alternative is testing and tracking, which it says is “necessary for identifying and stopping the illicit activities” in the medical market.
In June 2022, Fairfield police raided Yezi Craft Cannabis, a dispensary in Fairfield that authorities said had been operating without a license and was tied to illegal Chinese growing operations elsewhere in the state.
The shop was founded in September 2021 by a Chinese man from New York who bought a large warehouse at 201 Norridgewock Road in the company’s name. The dispensary opened months later in front of the warehouse, selling weed that had been grown in the back, according to state reports. But after state investigators visited the site in February 2022, those documents show it became clear the store was not operating legally.
A driver passes Y&Z Grow Medical Cannabis, formerly Yezi’s, on Norridgewock Road in Fairfield on Tuesday. (Rich Abrahamson/Staff Photographer)
Weed was stored in trash bags in the back of Yezi’s warehouse and sold in generic, unlabeled packaging in the front without a proper sales log, investigators wrote. They found several growers and workers at Yezi who were either unlicensed or had let their caregiver registrations lapse.
Yezi’s owner told investigators he had been moving product to and from a warehouse in Turner that regulators later described as an “organized criminal enterprise” run by out-of-state Chinese growers who allegedly trafficked in workers to grow weed. Some of that weed was laundered through Maine medical dispensaries, according to investigative reports, while some of it was transported out of state and sold into the black market.
After regulators wrote up Yezi and its workers for a number of violations during that February 2022 inspection, Yezi’s manager was never seen at the facility again. The Office of Cannabis Policy later wrote that he “continued to be domiciled in New York state” where he ran the dispensary from a distance.
By May 2022, several of Yezi’s growers had their licenses revoked and the storefront had been ordered to close. But records show that subsequent visits by state investigators found business continued as usual. A month later, it was raided by police, who made no arrests but destroyed hundreds of plants they said were growing illegally in the back.
The dispensary soon changed owners and reopened under a new name — Y&Z Grow. But a review of numerous deeds, mortgages, cannabis licenses and other documents shows Y&Z Grow’s owners are closely tied to Yezi’s and to the “organized criminal enterprise” of illegal Chinese growers OCP shut down in 2022.
Yezi’s operations mirrored the illegal Chinese cannabis grows and dispensaries Urben described across the country: The operations are decentralized and use interchangeable workers, allowing new shell companies and individuals to prop up whenever law enforcement intervenes.
Brick-and-mortar stores provide the best opportunity for criminal organizations to launder illicit weed and the millions of dollars in profit they can make from it, he said. Often, storefronts are inside large warehouses where unregulated weed can be grown and processed on-site, cutting out middlemen and streamlining production.
“The Chinese organized crime network is done differently. It’s managed differently, it franchises itself out much differently than other organized crime groups that are just a hierarchy,” Urben said. “They’re very good in terms of limiting risk. There’s limited violence. It’s very quiet. It doesn’t surface normally, and it’s very efficient.”
Maine is feeling the impact of illicit operators moving into legal markets, business owners say, in large part because of the program’s reputation as a “mom and pop” industry where barriers to entry are low and regulations are minimal.
Already, the state has seen a steep decline in the number of medical caregivers, but they say the recreational side is starting to feel the pressure, too.
Aaron Scalia joined the industry in 2015 as a medical caregiver. A few years later in 2018, he opened a medical cannabis shop in Manchester called AAA Pharms and later moved it into the recreational market. Business was good and growing until this year, he said, as neighboring businesses began selling cheaper and cheaper weed.
“Every year, our business has grown 20% to 30%. This year, we’re down 50% — $360,000 in revenue,” Scalia said. “If I wanted to sell an ounce for what it costs to grow, without making any money, it’s at least $150. And these dispensaries up and down the road are selling their marijuana for way less than that. How are we supposed to compete?”
Aaron Scalia, owner of AAA Pharms dispensary in Manchester, talks on Aug. 7 about the struggle the influx of cheap cannabis from suspected illegal growers into Maine’s medical cannabis market brings to his business. (Anna Chadwick/Staff Photographer)
“There are enough bad actors — or opportunistic actors — to kill this program for everybody else,” he added. “They’re not just fighting us, but they’re fighting each other. It’s a race to the bottom.”
So-called gray market grows have built-in advantages that allow them to produce weed in a cheaper way than established growers. Many have no labor costs, sometimes employing human trafficking. Federal authorities recently charged a Chinese national who allegedly operated a ring of illegal grows across Maine and Massachusetts by trafficking grow house workers into the country and “(keeping) possession of their passports until they repaid him” with their labor.
Short, stubby cannabis plants likely treated with chemical fertilizers are seen inside an illegal grow house during a police raid in March 2024. (Courtesy of Somerset County Sheriff’s Office)
Some Chinese growers also use chemicals to artificially keep cannabis plants short and stubby, allowing more plants to be grown inside a confined space and increasing plant yields.
The other major advantage is that dispensaries deal mostly in cash.
Many national banks refuse to work with businesses in an industry that the federal government says is illegal. Local banks and credit unions that do business with the industry often charge hefty fees but even they are closing Maine medical cannabis accounts because of the state’s lack of regulations.
But those in the industry say running cash-only enterprises creates personal and financial security risks and increases incentives for “bad actors” to join the market.
“There are definitely many, many businesses that run two sets of books,” said Black, the owner of Earth Keeper Cannabis. “There are so many ways of doing stuff under the table.”
Maine’s illicit Chinese grows are particularly hard to stamp out, local police and federal officials have said, in large part because of the lack of a coordinated statewide approach.
The state cannabis office has said it only has regulatory authority over licensed businesses, not illegal growers. And when the agency does try to investigate complaints in the medical market, an agency spokesperson said, “that work is frequently stymied by the lack of a statewide inventory tracking system and lax statutory requirements that allow individuals to hide bad behaviors by forging or manipulating records.”
Investigating and prosecuting illegal growers has often fallen to local sheriffs and district attorneys who say they often lack the time or resources to complete such investigations. Despite more than 60 grow houses being raided and over 30 people being arrested in Maine since 2023, none have been convicted on charges tied to illegal cannabis operations.
Urben, the retired DEA agent, noted that years of federal and state inaction have allowed organized criminals to take root. Federal officials have said they plan to send more personnel and resources to Maine, but those efforts haven’t yet materialized.
“If you make it harder for them in Maine, they will go elsewhere,” Urben said.
(Except for the headline, this story has not been edited by PostX News and is published from a syndicated feed.)
