WARWICK – A local marijuana cultivator is in danger of losing its license after being accused by state regulators of failing to disclose the identity of one of its owners and growing a significant amount of unregistered product, multiple news outlets have reported.
The R.I. Department of Business Regulation has scheduled a show-cause hearing for Sept. 15 where STJ LLC, also known as Fire Ganja, located at 36 Bellair Ave., will face those allegations and testify why it should not have its license revoked.
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The order came on Aug. 16 after The R.I. Office of Cannabis Regulation discovered in June that STJ had 1,473 untagged plants, 1,507 ounces of untagged flower, 2,038 ounces of untagged hash and 276 ounces of untagged concentrate, WPRI reported on Sept. 8.
Regulators discovered the unregistered product after an owner for STJ asked for assistance logging “mother plants,” into “Metrc” the state system which tracks all marijuana products from seed to sale, WPRI reported. Mother plants, which are nonflowering cannabis plants that allow growers to use a specimen, rather than a seed, to create new plants, are required to be logged into the state system.
STJ principal owner Mark Laraway told regulators on June 12 via email that he did not have mother plants logged into the system, “as I constantly kill them and start news ones,” WPRI reported. “I now need permission to log 100 mother plants into Metrc [system] so I can then create plant batches for the clones I take.”
Lowery’s email prompted state officials to do an on-site inspection at STJ, where they found more than $885,00 worth of unregistered product and ordered it destroyed.
Currently, STJ is now seeking an injunction to stop the show-cause hearing, according to a report in The Providence Journal.
STJ argues in court papers it had trouble using the new Metrc software program and that state regulators failed to “uniformly enforce certain aspects” of the new system, leading to confusion, according to the report. Also STJ company argues that a series of regulatory inspections and orders in June effectively shut down the company and were “tantamount to an illegal revocation of STJ’s cultivator license without a hearing and absent any statutory or regulatory authority.”
During their probe, R.I. regulators also uncovered a federal lawsuit between Fire Ganja and San Miguel LLC, which contained a 2018 agreement that required Fire Ganja owners Laraway and Nicholas Salvadore to transfer ownership stakes to San Miguel in exchange for a delay in repayment of an initial $750,000 loan made in 2017, in court documents obtained by WPRI.
Fire Ganja initially countersued San Miguel, claiming the interest rate tied to the deal was usurious because it exceeded the maximum rate allowable under Rhode Island law. However, the companies settled in March 2021. Fire Ganja agreed to pay San Miguel $2 million through monthly payments of $25,000 at 6% interest, including a balloon payment of the outstanding balance after 4½ years.
Fire Ganja filed amended paperwork with state regulators in June 2021 that added San Miguel as a lender to the business. At the time, Fire Ganja officials insisted “nothing has changed as far as ownership,” and that they “just wanted to update” their paperwork. State regulators, though, disagreed. They argue the federal court documents show there was a material change in ownership transferred to San Miguel, which Fire Ganja failed to disclose in violation of state regulation.
A spokesman for R.I. Department of Business Regulation did not immediately return a call seeking comment on Monday.
The lawyer representing STJ in the case, Sean Brousseau, of Hodosh, Spinella & Angelone PC, declined to comment on Monday when contacted by Providence Business News.
(Updates: Adds SJC seeking injunction to stop show-cause hearing in 7th and 8th paragraphs)
