Three businesses tied to the creation and sale of a marijuana-based sleep aid are shutting down their operations in Colorado after reaching a settlement and financial penalty that ends a lawsuit brought by the state.
The businesses, Nuka Properties LLC, Nuka Enterprises LLC, and Sima Sciences LLC, were behind the “1906” brand of products sold in Colorado since 2016. One of their best-known products was “Midnight Drops,” a pill made from cannabis combined with other plant-based ingredients.
According to state officials, problems with the product began surfacing in 2020, when consumers started filing complaints. In 2023, the state’s Department of Public Health and Environment and the Department of Revenue’s Marijuana Enforcement Division issued warnings to the public about health concerns linked to “Midnight Drops.”
The notice stated that earlier batches of “Midnight Drops,” produced before March 2022, contained an herbal ingredient called Corydalis, which could potentially cause liver damage. While research on Corydalis is limited, state officials said it raised enough concern to alert the public.
Later versions of the product were also flagged. State investigators found those pills included an extract from the Stephania plant containing L-THP, a compound also linked to signs of liver injury. The notice stated that users showed elevated liver enzyme levels, an early indicator of possible liver problems.
The notice stated that the companies had agreed to discontinue “Midnight Drops” and pull remaining stock from retailers. However, according to the attorney general’s office, the firms did not follow through. Instead, they allegedly continued producing and selling the capsules. Officials also accused the companies of failing to thoroughly research the safety of the herbal additives or properly inform stores about the risks.
The legal battle concluded last week with a settlement. The companies behind the 1906 line agreed to shut down their Colorado operations and pay a $400,000 fine. The agreement does leave open the possibility of resuming business at a later time if certain conditions are satisfied, though the state has not disclosed what those conditions are or how long they would remain in effect.
In addition, the settlement sets the stage for further financial consequences if the firms do not comply with the terms. Altogether, fines could climb as high as $1 million.
This case highlights a broader trend of regulators at both the federal and state levels penalizing companies that promote products with unsupported claims about health benefits.
The case also highlights why it is important to open legal marijuana markets where licensed companies, such as SNDL Inc. (NASDAQ: SNDL), are allowed to operate. Their products can undergo rigorous testing and any anomaly found can be addressed through product recalls or sanctioning the offending firms, as happened to the trio in Colorado. In this way, public health can be protected while also allowing adults who choose to consume products to do so safely.
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