PROVIDENCE, R.I. (WPRI) – State regulators are moving to revoke the license of one of the top marijuana growing businesses, alleging it failed to disclose an owner and had a significant amount of unregistered cannabis.
The R.I. Office of Cannabis Regulation has ordered STJ LLC, known better as Fire Ganja, to appear at a show-cause hearing on Sept. 15 to discuss why regulators are seeking to revoke its cultivator license.
The regulators issued the order on Aug. 16 after they learned earlier in the year the Warwick business had 1,473 untagged plants, 1,507 ounces of untagged flower, 2,038 ounces of untagged hash and 276 ounces of untagged concentrate, according to documents Target 12 obtained through a public records request.
Regulators initially discovered the irregularities at Fire Ganja in June after an owner reached out asking for permission to log so-called “mother plants” into a state system called “Metrc,” which tracks all marijuana products from the time they are seeds or clones until the moment they are sold at retail.
Mother plants are non-flowering cannabis plants that allow growers to use a specimen – rather than a seed – to create new plants, and they’re all required to be logged into the system.
“I did not have my mother plants logged in the system as I constantly kill them and start new ones,” Fire Ganja principal owner Mark Laraway wrote in an email to regulators on June 12. “I now need permission to log 100 mother plants into Metrc so I can then create plant batches for the clones I take.”
The email spurred state officials to do an on-site inspection at Fire Ganja on June 21, which is when they discovered the plethora of unregistered products that was tagged and destroyed.
But the probe into Fire Ganja didn’t end there.
Regulators subsequently discovered a federal lawsuit between Fire Ganja owners and another company, San Miguel LLC.
The lawsuit 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, according to court records reviewed by Target 12.
Fire Ganja initially pushed back and filed a countersuit against San Miguel, admitting to signing the 2018 agreement but that the interest rate tied to the deal was usurious because it exceeded the maximum rate allowable under Rhode Island law.
The agreements “are void and unenforceable,” Thomas Angelone, Laraway and Salvadore’s attorney, argued in court.
Salvadore did not immediately respond to requests for comment Friday afternoon.
The two companies ultimately reached an agreement in March 2021, requiring Fire Ganja to pay San Miguel $2 million through monthly payments of $25,000 at 6% interest, including a balloon payment of the outstanding balance after 4 ½ years, according to court records.
The cultivator also agreed to an entry of judgement totaling $2.2 million to be released from escrow and only have to come back to court in the event of a payment default.
Three months later in June 2021, Fire Ganja filed amended paperwork with state regulators 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.
After discovering the lawsuit, however, state regulators disagreed. They argued 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.
At the show-cause hearing, Fire Ganja will have an opportunity to address the allegations. The proceedings will likely result in the company either entering into a settlement and losing their license, or getting its license revoked outside of a settlement — which could signal a potential legal battle.