Arizona Tribune - Federal Rescheduling Is Rewarding a Cannabis Supply Chain Built on Fraudulent Safety Testing

WASHINGTON, D.C. / ACCESS Newswire / June 3, 2026 / MMJ International Holdings, (MMJ), a private pharmaceutical cannabinoid development company and petitioner in the consolidated D.C. Circuit challenge to the federal marijuana rescheduling order, today called on federal regulators, courts, and Congress to scrutinize the safety and testing record of the state-licensed cannabis industry before extending it federal legitimacy under the Controlled Substances Act.

The warning comes as the largest U.S. multi-state operators race to file applications under the expedited DEA registration pathway established by AG Order No. 6754-2026, with a 60-day priority window closing approximately June 27. The order, signed April 22 by Acting Attorney General Todd Blanche, moved state-licensed medical marijuana from Schedule I to Schedule III without notice-and-comment rule making, without FDA review, and without requiring a single state-licensed product to demonstrate safety, purity, or clinical efficacy.

"The federal government is rushing to grant legitimacy to a system that spent a decade operating outside pharmaceutical safety standards," said Duane Boise, President and CEO of MMJ International Holdings. "Before regulators hand out federal registrations, Americans deserve honest answers about contamination risks, laboratory reliability, and whether the products now entering Medicare reimbursement are safe."

A Documented Pattern of Laboratory Fraud

The safety testing infrastructure underlying the state-licensed cannabis supply chain has been systematically compromised. The evidence is not anecdotal. It is documented by state enforcement records, peer-reviewed litigation, investigative journalism, and active federal court proceedings.

In California, the Department of Cannabis Control (DCC) issued 63 product recalls affecting nearly 25,000 individual units and 481 product embargoes in 2024 alone - the first year the agency released embargo data. The DCC took 21 disciplinary actions against testing labs that year, including four license revocations. In the most egregious documented case, a lab's director signed a certificate of analysis stating no chlorfenapyr pesticide was detected in a cannabis batch. State testing of the same batch found nearly 600 times the permissible level of chlorfenapyr - a chemical classified as dangerous by the U.S. Centers for Disease Control and Prevention. Investigators found the lab had committed 20 separate violations, including deliberately falsifying pesticide and mycotoxin records and manipulating equipment to suppress detection of contaminants.

In Colorado, an independent shelf study published in early 2025 tested 15 cannabis products purchased from licensed Denver dispensaries. Only 2 of 15 complied with state regulations. Four contained coliform bacteria - indicative of fecal contamination - above legal limits, with one pre-roll registering 120 times the legal limit. A ProPublica and Denver Gazette investigation found Colorado's testing regime relies on an honor code that is openly exploited, with companies selecting their own test samples and regulators documenting two dozen violations in 2024 alone involving substituted or manipulated samples.

In California, two accredited testing labs filed a civil lawsuit against 13 competitor labs for issuing false certificates of analysis, describing the practice as "deliberate manipulation of testing results...to hide dangerous contaminants" that is "alarmingly widespread" and "not a result of mere negligence or error but a calculated effort to misrepresent the actual makeup of cannabis products." A concurrent L.A. Times and WeedWeek investigation found that 25 of 42 products purchased from licensed California dispensaries exceeded pesticide limits - products that had previously passed compliance testing at other labs.

Reports of fraudulent testing have emerged in New York's recreational market as well, with vape cartridges labeled at cannabinoid concentrations exceeding 100%.

The Science Required for Schedule III Classification Does Not Exist

Peer-reviewed research published in the journal Microorganisms found that fewer than 1% of cannabis-related scientific studies have examined microbial contamination, and only 0.5% have addressed mycotoxins, pathogens, and spoilage organisms. For immunocompromised patients - including the cancer patients and elderly Medicare beneficiaries now being prescribed these products - inhaling contaminated cannabis can cause life-threatening infection. The industry has not studied the risk.

A University of Colorado Boulder researcher warned in February 2026 that Colorado law actually prohibits labeling products that previously failed microbial testing and were subsequently remediated - meaning consumers have no way of knowing whether a product once tested positive for mold or pathogens. Critically, some fungi and mycotoxins survive the remediation process and remain in the final product.

The petitioners in D.C. Circuit Case No. 26-1136 - of which MMJ is a member - have argued directly to the court that there is no body of adequate and well-controlled scientific studies demonstrating that cannabis as sold in state-licensed dispensaries can effectively treat any specific medical condition at the level of rigor historically required for CSA scheduling. The government did not dispute the absence of that science. It rescheduled anyway.

Medicare Is Now Reimbursing These Products

The CMS Substance Access Beneficiary Engagement Incentive (BEI), which launched April 1, 2026, allows participating Medicare providers to furnish hemp-derived cannabinoid products to eligible seniors under ACO REACH and the Enhancing Oncology Model - without FDA drug approval and without resolution of the contamination and safety questions described above.

The European Food Safety Authority issued a scientific opinion in 2026 to Charlottes Web concluding that the safety of a major hemp extract product could not be established, citing incomplete toxicology data. A legal challenge to the BEI program was dismissed on jurisdictional standing grounds - not on the merits. The court did not rule the products are safe. An appeal is under consideration.

Beginning November 12, 2026, federal law will restrict hemp-derived cannabinoid products to no more than 0.4 milligrams of total THC per entire container - a threshold that disqualifies a substantial portion of the current market. Congress imposed that restriction while CMS was simultaneously launching the BEI program.

The Rescheduling Order Remains Under Active Legal Challenge

AG Order No. 6754-2026 is the subject of three consolidated petitions for review before the U.S. Court of Appeals for the D.C. Circuit (Case No. 26-1136). All three petitioner coalitions seek a stay of the order, a declaration of unlawfulness, and vacatur. The stay motion deadline passed June 4. If the court grants a stay, the order is suspended, cannabis reverts to Schedule I, Section 280E tax liability is immediately restored, and every DEA application filed under the expedited pathway rests on a voided legal foundation.

MMJ's challenge includes 13 grounds, among them: the order exceeds the Attorney General's statutory authority under § 811(d)(1); it violates the APA's notice-and-comment requirements; it lacks the scientific evidentiary basis required for Schedule III placement; it violates the major questions doctrine; and - in an argument MMJ established through its own prior litigation in MMJ BioPharma Cultivation Inc. v. Bondi - it was issued under an administrative law judge structure the Department of Justice has formally conceded violates the separation of powers and Article II of the Constitution.

The June 29 DEA hearing on broader rescheduling is scheduled to proceed before that same constitutionally defective administrative structure.

About MMJ International Holdings

MMJ International Holdings, Inc. is a private pharmaceutical cannabinoid development company. For more than eight years, MMJ and its subsidiaries - MMJ BioPharma Cultivation, Inc. and MMJ BioPharma Labs, Inc. - have pursued the FDA pharmaceutical pathway for cannabinoid medicines, including FDA Investigational New Drug applications, Orphan Drug Designation for Huntington's disease, DEA-registered laboratory infrastructure, and pharmaceutical soft-gel cannabinoid formulations developed under FDA guidance and validated manufacturing controls. MMJ BioPharma Labs holds an active DEA Schedule I analytical laboratory registration.

MMJ continues to advocate for the FDA botanical drug development pathway as the only mechanism capable of delivering standardized, reproducible, and contamination-free cannabinoid medicines to the American public.

CONTACT:
Madison Hisey
[email protected]
203-231-8583

This release references: AG Order No. 6754-2026, 91 Fed. Reg. 22,714 (Apr. 28, 2026); U.S. Court of Appeals for the D.C. Circuit Case No. 26-1136; California DCC 2024 Enforcement Report (Feb. 2025); MJBizDaily, "Colorado cannabis firm's testing experiment yields damning results" (Feb. 2025); ProPublica/Denver Gazette cannabis testing investigation (Feb. 2026); Microorganisms journal review of cannabis microbial contamination research; European Food Safety Authority 2026 opinion on hemp extract safety; CU Boulder/9News researcher warning (Feb. 2026).

SOURCE: MMJ International Holdings

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A.Anderson--AT