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Jul 29, 2023

Cases of illegal gummies and an overnight run out of state: Tales from Minnesota’s THC trade

Northland Vapor employees knew they didn’t have much time. It was the middle of the night on May 25. Within hours, a Minnesota regulator would arrive at the company’s Moorhead warehouse to take

Northland Vapor employees knew they didn’t have much time. It was the middle of the night on May 25. Within hours, a Minnesota regulator would arrive at the company’s Moorhead warehouse to take control of more than 400 boxes containing more than 1 million THC edibles the state considered illegally potent and potentially dangerous.

Hoping to save their multimillion-dollar investment, Northland’s owners set in motion a plan to keep their stocks of the gummy bear-shaped intoxicants, many sold under the name Death by Gummy Bears, just beyond Minnesota’s regulatory reach. The plan’s legality hinged on the definition of “midnight.”

By the time a Board of Pharmacy regulator reached the Moorhead warehouse at noon, the floor-to-ceiling metal shelves were nearly empty. Most of the cases of Death by Gummy Bears were gone — spirited to a warehouse out of state — and the next odd chapter in Minnesota’s yearlong attempt to police THC had begun.

THC-infused edibles became legal in Minnesota on July 1 last year. Weeks before the launch, though, officials privately expressed concern that the state wasn’t ready to regulate the market and didn’t know if the products about to hit state shelves were safe. Several observers ripped the new law as poorly constructed, toothless and ambiguous.

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Regulating that new market for THC — the compound that gives cannabis its high — fell to the Minnesota Board of Pharmacy. But officials there acknowledged they lacked the people and resources to watch over a rapidly growing market.

The board’s effort to stop Northland Vapor from selling Death by Gummy Bears has been its largest legal move so far. It didn’t seem like a complicated case when the board sued Northland in December, alleging that its products contained up to 20 times the legal limit for THC. And a judge later agreed that they were too strong to be sold in Minnesota.

Northland, though, has regularly tested the law’s boundaries. The company’s actions, outlined in dozens of court filings, show how its owners navigated the statute’s gray areas and a regulatory system still in its infancy by moving products out of state where their legal status was murkier.

Northland’s lawyers say the company did nothing wrong when it moved the cases across state lines in the middle of the night, although one of its attorneys acknowledged in a comment seemingly included by accident in a legal filing that such a late night operation could seem “nefarious.”

“I’m not sure I would agree with that characterization,” the company’s lead attorney Tyler Leverington said when asked about his colleague’s comment. “Ultimately, what matters isn’t how it looks. What matters is whether or not we comply with the judge’s order.”

The Board of Pharmacy has succeeded in forcing Northland to destroy 140 boxes of its illegal gummies. But another 260 boxes remain in limbo as the regulators, the company and the court sort out the law.

Court documents from the Board of Pharmacy’s lawsuit against Northland highlight what regulators say have been repeated attempts by Northland to circumvent Minnesota’s THC law.

In November, a Board of Pharmacy investigator attempted to embargo THC products at the Moorhead facility that it determined were more powerful than the state allowed. The board assumed that would have kept the company from moving any of the goods while the state sought a court order to have them incinerated.

In March, though, the board was tipped off that some of those products were being moved out of the warehouse anyway.

The tipster, a former Northland employee, told regulators in a sworn affidavit that another employee had disabled surveillance cameras and distracted their co-workers in order to remove the popular blueberry muffin flavor from boxes at the Moorhead warehouse. The affidavit said the products were then replaced with the less-profitable lemon bar flavor, brought in from out of state.

The Pharmacy Board thought it had embargoed Northland’s Death by Gummy Bears supply at the Moorhead warehouse by sticking labels on the shelves and some of the boxes, indicating the entire supply could not be moved.

The company countered that the board needed to stick a label on every single case it didn’t want Northland to sell and argued Northland could do as it pleased with gummies that hadn’t been “properly embargoed.”

The court agreed that each box needed its own label, and on the afternoon of May 24, it issued an order giving the Pharmacy Board until midnight the next day to return to Moorhead and stick embargo labels on all the boxes it wanted destroyed. The board emailed Northland that it would come by at noon on the 25th to do that.

Faced with the prospect of losing up to $7 million in total inventory, Northland’s owners decided on a strategy of challenging the definition of “midnight.”

If midnight occurred at the very end of the day on the 25th, then the regulators would easily be able to get to Moorhead on time to tag all the boxes. But if midnight was defined as the very first moment of a new day, then the regulators would miss the deadline so that all boxes without the embargo tag could be moved.

At 12:10 a.m. on the 25th, as far as Northland Vapor was concerned, midnight had come and gone 10 minutes earlier and the inspectors had missed their deadline.

In the wee hours of that morning, workers began packing up the unlabeled boxes and shipping them out of state before the Pharmacy Board agent arrived at noon. Northland hasn’t said exactly where they were moved, but it has warehouses in both North Dakota and South Dakota, court records show.

North Dakota’s Department of Agriculture says products containing Delta-8 THC, the active ingredient in Death by Gummies, have been illegal there since 2021, and this year the state adopted a new law cracking down on their sale. An employee at one of Northland's Fargo stores confirmed Thursday that they are no longer selling THC products there as a result.

Delta-8 products derived from hemp are legal in South Dakota for people 21 or older. In 2018, the federal government created a legal gray area for products containing THC so long as they were produced using hemp, instead of more potent marijuana plants.

When the court ordered Northland to return the products following the overnight run, Leverington, the company’s attorney, questioned whether Minnesota still had authority over them. The court ordered them brought back and destroyed. Northland returned them to Minnesota, but they remain in its warehouse, because the company has filed an appeal.

While the legal wrangling may sound amusing, the issues around the sale of and control of THC products are serious matters.

In court documents, former employees said they felt pressured to stay silent and comply with Northland’s efforts to keep Minnesota regulators at bay. One alleged that the company had purchased an abandoned grocery store in South Dakota and was making THC gummies at a lower quality and packaging them in an “unsafe manner” on plastic tarps. The warehouse had mold on its walls and no running water, according to an affidavit.

“We would dispute those accounts wholeheartedly,” Leverington said in an interview. “This isn’t a few guys doing something in the back of their garage in the middle of the night. This is a professional business that does things the right way and will continue to do things the right way.”

Last month, the U.S. Food and Drug Administration sent a warning letter to Northland Vapor based on an inspection from last fall alleging that gummies in the Moorhead facility were “prepared, packed or held under insanitary conditions whereby they may have become contaminated with filth.” The letter informed Northland that their Delta-8 THC products “may pose a serious health risk to consumers.”

According to an affidavit submitted by the state, the Pharmacy Board has received complaints from the FDA alleging Northland’s Death by Gummy Bears edibles were involved in the death of one man in North Carolina and the hospitalization of two teens in Iowa. Northland has denied its products have harmed people.

“While a loss of life is obviously a terrible thing, we don’t believe our products had anything to do with that,” Leverington said.

Northland Vapor is owned and operated by 34-year-old Brett Erpelding. He started it in 2015 in his mother’s basement, primarily promoting his products on the online message board Reddit, according to Fargo INC!, the city’s entrepreneurial magazine. He opened his first store 2 ½ years later in Moorhead.

Northland has operations in Bemidji, Moorhead, Fargo and Sioux Falls. The company also owns Wonky Weeds, Minnabis, Alpine Hemp and Kava Kove.

Brett’s father, Brad Erpelding, is Northland’s chief financial officer, and other relatives have held positions in the company or currently work there, according to their social media accounts.

Brett Erpelding appeared with some of them last fall on “North Dakota Today,” a local TV show. He said his products were superior to those made by some of his competitors.

“There’s a lot of questionable practices out there,” Erpelding said. “It’s kind of the wild west of the cannabinoid market, so a lot of people can do whatever. You can kind of legally make them in your basement if you want to, and that’s maybe not ideal for the consumer. So we make them with quality first in mind.”

Erpelding told the local magazine he was inspired to start Northland Vapor after he switched from smoking cigarettes to vaping and noticed how much easier it was to walk up a flight of stairs.

Brett Erpelding did not respond to voice mail messages left at phone numbers associated with him in public record databases.

Minnesota lawmakers viewed last year’s legalization of edible and drinkable THC products as a kind of trial run as the state weighed fully legalizing recreational marijuana for adults. That became law this year. The Minnesota Department of Health has taken over the regulation of marijuana and THC sales from the Pharmacy Board.

The new law, which took effect Aug. 1, makes it a crime to knowingly sell products that do not comply with packaging, testing and labeling requirements, not just a civil matter. It’s not certain how the new law might affect Northland Vapor’s ongoing legal battles with the state.

The Minnesota Department of Health declined to comment on future licensing decisions.

While 140 embargoed boxes of Northland’s products were destroyed in June, 260 boxes of product remain under embargo in the Moorhead facility, awaiting a Minnesota Court of Appeals decision. The Minnesota Attorney General’s Office says that may not come until the fall.

MPR News associate digital producer Amy Felegy contributed reporting.