This story has been updated with a screen shot of Empire Cannabis Club’s Stiiizy offerings.
The labels of four Stiiizy-branded vape products purchased in New York City suggest that there is an illegal pipeline of products originating at the company’s licensed Los Angeles factory and reaching out of state markets.
There are essentially two ways cannabis products legally manufactured in California can reach other states, both illegal. They can 1) Be diverted from a company’s supply chain; or 2) Sent out of state after a consumer legally purchases them.
Stiiizy’s parent company, Shryne Group, declined to comment on the vapes purchased in New York, but provided the following statement:
STIIIZY products are currently only legally sold in California, Arizona, Nevada, and Michigan. While we cannot comment on possible counterfeit sales, which STIIIZY combats with constantly updated packaging with verification QR codes, or unethical third-party distribution practices outside of these legal markets, we can affirm that STIIIZY’s mission is to bring high quality and safe access to cannabis in 100% compliance in jurisdictions where sales are legal.
- (More on the counterfeit question below.)
LA-based Shryne doesn’t disclose its numbers, but it’s frequently cited as a unicorn thriving despite California’s punishing market. In June, Shryne received a loan of up to $170M co-led by Silver Spike Capital, which took Weedmaps public through a SPAC deal this year. (Silver Spike did not respond to requests for comment.)
Best known for its Stiiizy vape pods, Shryne is vertically integrated with factories in Lompoc (Santa Barbara Co.), LA and Oakland, according to its web site. It has more than 20 dispensaries under the Stiiizy and Authentic brands. According to data shop BDSA, Stiiizy was California’s top cannabis brand in any category last year, and third nationwide, with roughly $250M in sales (through November) across California, Michigan, Nevada and Arizona. There’s to transport cannabis across state lines, even between legal states.
In California, it’s widely acknowledged that many struggling licensed companies stay afloat by maintaining a back door to the illegal market. As companies grow larger and more successful, the incentive structure promotes legal behavior: The rewards of staying aboveboard increase, and there’s more to lose if a company gets caught breaking the law. If products are leaking from Stiiizy’s supply chain, it could indicate that the California market is even tougher than everyone says.
The vapes in question
Recently, after receiving a tip, I asked two people to visit smoke shops in New York City and pick up Stiiizy vapes. New York’s state REC market hasn’t yet opened, but city Mayor Eric Adams has welcomed the grey market. Unlicensed dispensaries operate openly and THC products can now be purchased at smoke shops and even several grey market consumption lounges.
The New Yorkers sent pictures of three products they’d bought, one in Midtown, one on the Lower East Side and one from Brooklyn’s Cobble Hill.
Here are the labels of the Manhattan vapes:
Purchased in Manhattan July 2022
Photo by Brad Racino
Here’s the one from Brooklyn:
Purchased in Brooklyn July 2022
Stiiizy has been combatting counterfeits of its popular vapes for years, but declined to comment on whether it believes these specimens are authentic.
If the labels are counterfeit, they are thorough. Each label:
- Says that it was manufactured legally by Ironworks Collective Inc. Ironworks is a SoCal company with cultivation, manufacturing, distribution and retail licenses in Los Angeles County. The names listed on Ironworks licenses include Shryne Group execs Jon Avidor, Takayuki Sato and CEO James Kim.
- Includes a phone number for a working Stiiizy support line.
- Has a QR code that produces the label’s UID number. (Try them.)
- Has a packaging date
The California Department of Cannabis Control said it could not determine if the above photos were of authentic Stiiizy products. Asked if it was aware of counterfeit Stiiizy labels that include a factory name, the agency declined to comment.
After receiving these pictures, I asked one of the New Yorkers to purchase a fourth Stiiizy vape, this one from the Empire Cannabis Club. Empire is is a “non-charitable, not for profit” dispensary, a new kind of legal entity designed to operate in New York before licensed pot shops can. To shop there, my friend had to buy a $15 day pass.
Empire, which has about 100 employees, operates storefronts and delivery services out of Chelsea, the Lower East Side and Williamsburg. As of today, its Chelsea branch stocked several recognizable California brands including Kanha, Jeeter, and Kiva as well as eight Stiiizy vape products.
Here’s what she bought:
Purchased at Empire Cannabis Clubs, Chelsea, August 2022
Empire’s lawyer, Steve Zissou, said he has no idea how California products reach Empire, but he guaranteed that whatever it stocks is authentic (non-counterfeit). Stiiizy declined to comment on whether the above product is counterfeit.
- Jonathan Elfand, the longtime cannabis activist who runs Empire, recently told Forbes that “Every single company has a back door.” His lawyer, Zissou, claimed not to know what Elfand was talking about.
An August 11 screenshot of some of Empire Cannabis Club’s Stiiizy offerings. Empirecannabisclubs.com
Stiiizy vapes are available in four states. Since there’s no legal cannabis business that crosses state borders, compliance requires those pods to be manufactured at at least one site in each state. If New York’s City’s appetite for Stiiizy vapes can be met in a haphazard way by a combination of counterfeits and whatever licensed products wash in from legal states, it’s unlikely that all four products bought at random in the city would come from the same LA factory.
- (If the odds were calculated for a controlled casino-like environment, which this is not, and there were four total Stiiizy vape factories, the chance that all four vapes purchased at random in New York came from the same factory would be about 1%.)
It seems more probable that there’s an organized operation diverting products manufactured by Ironworks into the illegal market. The key question is whether they are diverted before or after a legal sale to a customer.
There’s data that could probably help determine the answer, but I wasn’t able to obtain it. California and more than a dozen other states contract with software company Metrc to track cannabis products from seed to sale, but neither state regulators (citing statute) nor Metrc would provide it.
Shryne may also possess relevant data. According to Metrc, “businesses and their designated employees will only have visibility in Metrc on current and historical inventory that has lived within their specific Metrc business license.” Shryne declined to provide any data.
- Brad Racino contributed reporting