Loudpack Farms had a multimillion-dollar problem.
An award-winning marijuana vape pen that was among the most profitable items sold by the cultivator had begun turning up at unlicensed weed dispensaries across California, its signature black box with the image of a red-eyed, stoned-out-of-his-mind playing-card king beckoning customers.
As it became clear that someone was counterfeiting the Kingpen brand, Loudpack Farms spent $2.5 million on new packaging and hardware last year to distinguish it from the knockoffs.
“The counterfeit market started replicating what we were doing almost as quickly,” said Daniel Corral, head of sales at the Monterey County firm.
Kingpen’s struggles are emblematic of a dilemma that California’s fledgling legal marijuana market is facing: a proliferation of counterfeit cannabis products that’s cutting into the profits and reputations of some of the state’s most popular legal brands while boosting sales in a thriving black market.
Fake vape pens and other knockoffs flooding the state are also raising safety issues: Like all products sold outside licensed dispensaries, counterfeit items are not tested for pesticides and other contaminants, leaving some concerned the items could pose health risks.
Licensed cannabis cultivators and businesses can’t distribute their wares to unlicensed dispensaries and delivery services without risking punishment from regulatory agencies, meaning any brand-name item that customers find in an illegal shop is almost certainly counterfeit.
“Any of those black market shops that you go into and have brands, that’s just like you going to the flea market on the weekend and getting your Prada shirt for $5,” said Ryan Jennemann, founder of THC Design, a Los Angeles cultivator that has also been a victim of counterfeiting. “That ain’t a Prada shirt.”
Although those in the cannabis industry differ on the severity of the problem, most agree counterfeit items are providing a boost to unlicensed dispensaries, which can