Latest news with #Stiiizy
New York Times
10-05-2025
- Business
- New York Times
New York Pauses Sales of Popular Cannabis Vapes Amid Investigation
New York State has paused sales of millions of dollars of top-selling cannabis vapes and pre-rolled joints amid an investigation into whether they were made with legally approved ingredients produced in the state, according to documents obtained by The New York Times. In a series of orders issued on April 23, the Office of Cannabis Management, which oversees businesses that grow and sell cannabis in the state, directed dispensaries to remove from their shelves mostly vapes and pre-rolled joints from the companies Stiiizy and mfused, among other products. The orders offered a window into the cannabis agency's investigation of companies accused of pumping weed from unlicensed growers into licensed dispensaries, which is illegal. The Times obtained two of the documents through a public records request and another order from two people with whom they were shared. The strategy of using unlicensed growers, known as 'inversion,' undercuts promises that legalization offers consumers a safe supply of cannabis products that can be traced back to local farms. It is a federal crime to transport marijuana across state lines, so legal weed has to be grown and sold in the same state through licensed businesses. According to the orders, investigators were questioning the origin of cannabis oil that was used to fill the vapes and the accuracy of lab tests that certified all of the mfused varieties as safe. Stiiizy, based in Los Angeles, and mfused, based in Seattle, are two of the biggest cannabis brands in America. Their vapes were among the 10 best sellers in New York in April, according to Headset, a data firm that crunches cannabis sales numbers. The quarantined products, which are being held in factory warehouses and dispensary vaults, have a retail value exceeding $10 million, according to batch records and retail pricing. If investigators find evidence of inversion, the products could be seized and destroyed in a recall. In the most severe case, regulators could revoke the license of the processing company that made the vapes and ban the brands from New York. If the investigation finds no wrongdoing, the products could be released for sale. In a statement, mfused said that it stood by the integrity of its products, while Stiiizy said it was confident the investigation would find no evidence of inversion on its part. Kaycha Labs, a state-licensed laboratory that did the testing for mfused, did not respond to an email seeking comment. The brands each have contracts with Omnium Health, a state-licensed processing company that makes their vapes in New York. Omnium records reviewed by inspectors with the Office of Cannabis Management, or O.C.M., in connection with an audit on April 7 indicated that the vapes were filled with oil that had been extracted at a site associated with Omnium that hadn't been approved for processing of the oil, the order said. Officials barred Omnium from using the oil until it could prove it was extracted legally. An order served on a different processor, Adonis Distribution in Gloversville, N.Y., also froze sales of some pre-rolled joints infused with terpenes, the compounds that give cannabis its smell and flavor, that were not properly logged. In a statement, Omnium said the situation boiled down to a clerical error. 'The confusion arose from the address listed on the document being Omnium's corporate address rather than the actual site of extraction,' the company said. 'It was confirmed that all extraction occurred at an approved location, which was inspected by the O.C.M. and verified to have proper extraction equipment on site.' The O.C.M. said in a statement that its investigation was still active, adding that Omnium had submitted a plan for correcting the issues outlined in the orders. The quarantine remained in effect on Thursday. Thousands of the vapes have already been sold to consumers, particularly around April 20, the date of the unofficial annual celebration of cannabis that is typically the biggest sales day for retailers. In an email to retailers on April 23, Omnium said the quarantine order also applied to products under the brands Animal, Bodega Boyz, Muha Meds, Smoke and To The Moon. The quarantine has left the state's licensed dispensaries in a lurch. Brandon Carter, a co-owner of Trends in Long Island City, Queens, said that dispensaries place larger orders ahead of April 20, expecting to conduct more sales on the day and as the weather warms. The quarantine has forced them to hold onto weed they can't sell to customers who are looking for it, he said. 'That's a lot of extra inventory that people have to sit on that we can't make any money on,' he said. At The Flowery on the Upper West Side of Manhattan, a chunk of shelf space that housed mfused's product display sat empty last Sunday. The brand had been a best seller. Lenox Hill Cannabis on the Upper East Side said the quarantine affected about 15 percent of the store's inventory. Wei Hu, a co-owner of Lenox Hill Cannabis, said his store put in a big order for Stiiizy's vapes and pre-rolled joints after they were released in New York in February. He said he expected the brand to sell well because it was already popular on the West Coast and in the street market. Half the order was sold by the time the quarantine went into effect, he said, but the other half is stashed in a vault. Customers 'are asking for Stiiizy,' he said. 'They're wondering why it's not on the menu.'
Forbes
18-04-2025
- Business
- Forbes
Inside Stiiizy, The World's Best-Selling Weed Brand
Inside a warehouse in Downtown Los Angeles, next to a strip club, James Kim, the CEO and cofounder of the California-based cannabis brand Stiiizy opens the door to one of his grow rooms, revealing 972 pot plants, thriving three-foot-tall beauties two weeks from harvest. 'This room is all money,' says Kim, who is 37 and has tattoos covering his arms, including a portrait of Ben Franklin and a rose made from a $100 bill. Ethan Pines For Forbes These days, Stiiizy is bringing in plenty of Benjamins. The company—which was founded in 2017 and grows cannabis, manufacturers vapes, pre-rolls, gummies and flower—has nearly 50 branded dispensaries across California and generates more than $800 million a year in revenue. Stiiizy, which is also California's biggest cannabis retailer, is the best-selling weed brand in the country, according to sales data firm Headset. A vertically integrated powerhouse that now operates in seven states, one out of every eight cannabis products sold in the United States is a Stiiizy product. The company, which Forbes estimates to be valued at $1.5 billion, is privately held, secretive and mysterious—out of four original co-founders, only Kim would agree to speak, and he would not confirm the names of his partners. Founded in the gray market days before California legalized recreational marijuana, Stiiizy has also been dogged by lawsuits, rumors of illicit activity (all of which the company denies) and scandals, but none of that has changed the fact that in the $32 billion regulated cannabis industry, Stiiizy is the brand to beat. Illustration by Kelly Thompson for Forbes 'We're the number-one brand in the nation,' says Kim. 'I always tell people, if we're number one in the nation, we're number one in the world.' A floor below the grow room, Kim walks through his production facility where dozens of employees in blue hairnets and facemasks brush mini blunts with a brown liquid and roll them into a half-pound of kief and put them into trays. In another room, a woman uses a machine to fill 100 Stiiizy vape pens at a time—by the end of the day, workers here will make nearly 100,000 of them. Every month, Stiiizy grows 15,000 pounds of weed and produces about $70 million worth (retail sales) of cannabis products in California, not including how much it produces in Nevada, Arizona, Michigan, Missouri, Illinois, and New York, where Stiiizy launched in February and rose to be among the top 10 best-selling brands within a month. Kim walks out of his warehouse and jumps in the back of his black Cadillac Escalade and his driver takes him a few minutes down the road to Stiiizy's DTLA headquarters. 'We always had dreams of the brand getting big,' says Kim, while Notorious BIG's 'Juicy' plays over the car speakers. 'But we didn't know it would be this big.' Kim, who sports an Audemars Piguet Royal Oak chronograph on his wrist, grew up humbly in Cerritos, California. He shared a bed with his older sister so his parents, both immigrants from South Korea, could rent out the other bedroom to help make ends meet. His parents sold women's clothing at the local Santa Fe Springs Swap Meet and starting at six years old, young James was in charge of setting up the tent, manning the cash register and helping his mom set prices for clothes. (His mom taught him her strategy, which was to price each item at double her cost.) 'They put me to work,' he says. 'That swap meet was my life.' It didn't keep him out of trouble, however. By the time he was 14, Kim was regularly ditching school to skateboard and smoke weed, and eventually, he began selling it. He soon got pinched with a dime bag and was put on probation. At 17, he was arrested for armed robbery. (The charge was later dropped for lack of evidence and his friend, who had actually committed the crime, took the wrap, but not before Kim spent a week in juvenile detention.) He dropped out of high school junior year to work construction, and then at a warehouse. One day, his mom found a pound of marijuana in his room and demanded he come home. She held the weed over the toilet, threatening to flush the whole thing. But Kim convinced her to give it back, saying he owed his source $2,000 for the stash, and could make a few thousand more for himself. 'That's how I was able to provide my own lunch money or movie money or shoe money,' says Kim. 'It wasn't a scheme to be this high school kingpin.' With a goal to graduate high school and become a mechanic, Kim began attending a continuation school for troublemakers and kids at risk of dropping out. In 2006, after a graduation party, he came home late at night and turned on the TV. An Army commercial came on. The next morning, he found himself at a recruiting center and eight weeks later, he was at Fort Campbell, Kentucky, a member of the 101st Airborne division. Within six months, he was holding an M-4 assault rifle in Baghdad, fighting Saddam Hussein's troops in close combat. Before his tour was over, his best friend was blown up during a week-long fire fight. 'It was like being in a bad dream that you didn't want to be in,' says Kim, now in his rented penthouse with sweeping views of Downtown LA. 'But it kept going for 13 months.' In 2014, four years after Kim returned home, he started a nicotine vape shop to cash in on the vape craze sweeping the nation. After a year, he closed the store to launch Kilo, a nicotine vape juice brand, with his high school buddy Jonathan Lee. They hit paydirt—Kilo had $6 million in revenue the first year, $12 million the second and $20 million the third. A marketer at heart, Kim grew Kilo's customer base around the world, selling his products in the United States as well as Greece and Russia. In 2016, another high school friend Sam Cho, who was working in the medical marijuana space, told him that they should start a weed brand and get ready for California's recreational market, which was set to launch in 2018. Kim mapped out the brand and came up with the name Stiiizy, blending the skate slang 'steeze' and 'easy.' He sank his life savings, a couple million dollars, and, along with his nicotine partner Lee, Cho and Tony Huang, who also seeded the company, and Stiiizy was born as a vape brand. After buying 500 vaporizers from China and THC oil from a California extractor, Stiiizy started selling in the unlicensed days right before California opened its recreational market. Within a year, Stiiizy built a cultivation site, expanded into flower, edibles and pre-rolls, and by August 2019, Stiiizy opened its first store. 'What made Stiiizy different was that they had an established brand even before legalization,' says Daniel Yi, the company's former chief communications officer. 'They had the advantage of huge momentum, and seemingly endless cash reserves.' Earlier that year, Stiiizy merged with North Star, a northern California-based operator with grows, manufacturing and dispensaries, which was run by a real estate entrepreneur Brian Mitchell. The new company, dubbed the Shryne Group, suddenly had a huge footprint. The company was on a tear, with sales ballooning as the team opened new stores around the state. This year, Stiiizy has a goal to open one new store a month. 'We are on the road to 100 stores,' says Kim. But with success, came legal troubles and rumors of black-market operations. Stiiizy vapes began showing up in New York's unlicensed market—at bodegas and smoke shops—and were even spotted south of the border in Mexico City. Cannabis investors and executives who have worked in California's industry for over a decade say the rumors of Stiiizy diverting products into the illicit market are so pervasive that it has become an 'open secret.' 'They are not the best rule followers in the world,' says one California-based cannabis company executive who asked to remain anonymous. Tak Sato, Stiiizy's president, strongly denies the allegations and says that the company '100%' does not operate illegally, adding that when Stiiizy products are found in unlicensed stores or on the black market that they are either counterfeits or smuggled from California by people who buy them in licensed dispensaries. 'The risk simply would not make any sense,' says Sato. 'If we were actually found to have been doing something like that, it's just over.' But even insiders have claimed Stiiizy breaks the law. Jon Avidor, who was CEO of the brand in 2021, filed a lawsuit against the company in September 2023, claiming it had improperly fired him from the board and took shares away he rightfully owned and alleged rampant illegal activity. Stiiizy denied these claims and Avidor voluntarily dismissed the lawsuit before the parties settled. Then in December 2023, The Los Angeles Times published an investigation that connected cofounder Tony Huang to multiple properties he owned around California that leased spaces to unlicensed dispensaries. Huang denied the allegations but Los Angeles City Attorney fined Huang and other owners of a property tied to illicit marijuana sales $450,000. In early April, New York cannabis regulators conducted a surprise audit on a Long Island-based cannabis manufacturer that makes products for a range of companies after receiving a tip that Stiiizy and other brands were sourcing cannabis from the black market or grown out of state. Sato says Stiiizy had been gearing up for the February expansion to New York's licensed market since October 2024 and its New York partner produced much more than it needed, but that it was not breaking any laws. A spokesperson from New York State's Office of Cannabis Management says that the information collected during the inspection 'is currently under review' and will release its findings when the regulatory process is complete. Kim brushes the allegations off as all part of the 'dog-eat-dog' world of legal weed, where margins are thin, regulations are tough, taxes are punitive and competitors spread false rumors. 'It's like the movie Mean Girls,' says Kim. 'They're saying I'm the biggest slut in school. Well, I'm not. And I'm tired of it.' All of the notoriety has not hurt Stiiizy's sales. In fact, its outlaw reputation seems to have had the opposite effect. As a legacy brand, the added street cred has burnished the company's position as the industry's leader. Stiiizy is for stoners, not soccer moms and the so-called 'canna-curious'—for Stiiizy enthusiasts, the company is one of the real ones. While many weed brands have been developed in boardrooms, or by former corporate consultants, and look like something sold at Whole Foods, Stiiizy came of age in the unregulated weed world of Downtown LA, giving the company just the right amount of outlaw attitude. 'I think a lot of people are threatened by us because they don't understand how we are doing it,' says Kim. 'I don't even know how we're doing it, but I think I just know the consumer. That's the missing piece from the corporate guys—they don't know the consumer.' With nearly $400 million in sales in California alone last year, Stiiizy controls about 7% of the Golden State's $5 billion legal cannabis industry. 'They are an insane brand, the consumer passion for them is just mind-blowing,' says Kyle Sherman, the CEO and founder of cannabis dispensary software company Flowhub. 'They have executed better than any other brand in the industry.' Back at his penthouse, Kim sits at a long dining room table. He says when they started Stiiizy, the goal was to build a company that would last a decade, with the hope that it would be around even longer. Now, Stiiizy wants to be the 'Nike of weed,' he says, a company known as the go-to brand for all things cannabis. 'My goal now is that Stiiizy will become a lifetime brand,' says Kim. 'This is my legacy.'
New York Times
07-04-2025
- Business
- New York Times
New York Regulators Target Weed Brands Accused of Breaking Rules
New York State regulators are investigating some of America's biggest cannabis companies after receiving complaints that they have been selling marijuana to New York dispensaries that comes from unauthorized sources or is grown out of state, an illegal practice that has been called the industry's open secret. Since February, the Office of Cannabis Management, which oversees the cultivation and sale of marijuana in New York, has been investigating whether several companies, including Stiiizy, the nation's best-selling brand, are laundering weed through a processor on Long Island, according to two people with knowledge of the matter. The state inquiry entered a new phase on Monday when inspectors from the agency conducted surprise audits at the factories of the processor, Omnium Canna, which makes products for the brands included in the investigation. It is a federal crime to transport marijuana across state lines, so legal weed has to be grown and sold in the same state through licensed businesses. But some companies have long been suspected of cutting costs by sourcing weed from states where it is cheaper or by buying from unlicensed growers. The strategy, known as 'inversion,' undercuts promises that legalization offers consumers a safe supply of cannabis products that can be traced back to local farms. Instead, New York consumers may have been sold products that have not been as rigorously tested for safety, while licensed growers have been left with a glut of weed that they can't sell in the state's billion-dollar market. The investigation signals a shift in priorities for the Office of Cannabis Management, which has long been accused by license holders, particularly growers, of ignoring misconduct as regulators focused on setting up the recreational market. The state inquiry is likely to reverberate across an industry in which cheating is believed to have gone largely unchecked. It is unclear how widespread inversion is in New York. But law enforcement authorities frequently intercept shipments of weed destined for New York. Stiiizy, a Los Angeles-based company whose name comes from a portmanteau of 'style' and 'ease,' officially launched in New York in February. But it has been a mainstay of the illicit market for years. Its products are packaged in factories on Long Island that are hubs for other popular brands like Grön, which is also under investigation. The brands — along with To the Moon, Turn and Waahoo — could be permanently banned from New York. And they may face more scrutiny in other states where they are sold. Waahoo is Omnium's house brand. State regulators and the cannabis companies did not immediately respond to a request for comment. This is a developing story and will be updated.
