New York cannabis users and licensees are calling for a law to combat inversion, or the funneling of illegal trafficked products from other states pervasive in the legal market.

This week, the state Office of Cannabis Management filed its first charges against company Omnium Health over accusations of inversion and reverse licensing. The department imposed a $1 million fine on the company and revoked its license.

“It was the worst secret in New York State cannabis that this process was going on and is continuing to go on,” said Joe Rossi, chief strategist with the Empire State Green Standard Alliance, which represents hundreds of consumers.

The department Monday issued a recall order against Omnium — giving the company 24 hours to provide requsted information to discern which products were properly regulated and which were unsafe for consumers. It’s unclear if the company has replied to state regulators.

OCM’s action served as a warning to regulated businesses not to exploit loopholes in state cannabis law. Cannabis advocates are praising OCM’s action, but said consequences against the company alone aren’t enough to keep consumers safe and the department needs the Legislature’s help.

“We want to make sure that potential bad actors who are looking to do similar things realize that there is a penalty to do so in New York,” said Empire Cannabis Manufacturers Alliance President Mack Hueber.

Advocates are pushing the Legislature to codify the rules around inversion and penalties for doing it. The change would embolden OCM enforcement and its Trade Practices Bureau to protect consumers — shifting the burden to the cannabis processor to prove products were not trafficked from other states.

“There hasn’t been really a lot of enforcement up until now, or even threats of enforcement,” Hueber said. “So it’s allowed the bad actors to continue to push the limit.”

Rossi said the legislation should include protections for whistleblowers, or workers directed to launder illegal products.

It’s difficult to pinpoint how much of New York’s industry is tainted with unregulated products from other states — threatening consumer safety and the stability of the legal market.

Cannabis licensees across the industry said they have heard estimates ranging from 30 to 80% of products sold in licensed dispensaries.

“You don’t know if it’s safe, don’t know if it’s quality, you don’t know if it’s been tested,” Rossi said.

The state’s electronic Seed to Sale system that tracks the legal cannabis chain is expected to launch early next year, OCM’s Director of Regulatory Operations Patrick McKeage told Spectrum News 1 last month.

“It helps with everything from compliance, stopping inversion, to things like recalls when the pesticide or something needs to happen like that,” he said after a Sept. 9 Cannabis Control Board meeting. “So we’re really excited and we’re already working to implement it.”

OCM was forced to delay the system this summer because of a company merger. Licensees were expected to be integrated into the tracking system over the course of three months, but the department expects to allow all licensees to start at the same time and reduce issues.

Advocates said the tracking system, and more staffing for OCM will improve consumer safety and a fair market that must come before profit.

Lawmakers are discussing legislation to codify inversion in state law next session.

Assembly Majority Leader Crystal Peoples-Stokes, a Buffalo Democrat, sponsored the 2021 Marijuana Regulation & Taxation Act, which legalized recreational marijuana in the state.

“I am exploring possible legislative remedies to maintain the integrity of the market as intended by the MRTA,” she said in a statement Thursday.

Senate Cannabis Subcommittee chair Jeremy Cooney said he is also monitoring the inversion issue and legislative solutions to combat it.

“It’s always been my belief that the only way for our legal cannabis market to be successful is if consumers can trust the products they’re buying,” Cooney said in a statement. “I’m closely monitoring the situation with Omnium and am continuing to review state policies to ensure only legal products are hitting our shelves. All New Yorkers deserve peace of mind when they enter a legal dispensary that their products will be safe.”

The state Office of Cannabis Management declined to comment.