3 Cannabis Companies Fined $400,000 Amid Colorado Product Safety Crackdown

Published: 19 September 2025

Updated: 30 September 2025

Three cannabis companies have been ordered to leave Colorado’s cannabis market after a state investigation linked one of their products to liver injuries. Attorney General Phil Weiser announced on September 19, 2025, that Nuka Enterprises, Sima Sciences, and Nuka Properties reached a settlement requiring them to cease operations and pay $400,000 in fines. The agreement could escalate to $1 million in penalties if the companies violate its terms.

The firms were behind Midnight Drops, a cannabis-based sleep aid sold under the 1906 brand. According to investigators, the companies were alerted as early as 2020 to consumer complaints about liver issues but continued to market the product. The capsules included cannabis along with corydalis and stephania extracts, both of which state officials later linked to liver injury or elevated liver enzymes.

Colorado’s Marijuana Enforcement Division and Department of Public Health and Environment issued a health advisory in 2023 warning consumers about risks tied to Midnight Drops. Despite this, the product remained available in some dispensaries, and the companies failed to conduct adequate research or notify retailers about the dangers.

Under the settlement, the companies may only return to Colorado if they meet undisclosed conditions set by regulators. In addition to the fine, they face further penalties if they breach the agreement.

Colorado’s cannabis industry is facing broader scrutiny as product recalls surge across the state. In 2025 alone, recalls have affected 465 dispensaries, already surpassing the 333 stores impacted in 2023. On September 9, one of the largest recalls in state history involved 710 Labs, whose flower and pre-roll products were pulled from 172 stores after state testing revealed aspergillus fungus and excess mold and yeast. Though the company initially disputed the results, it later acknowledged the failed retests and issued its own recall notice.

Other recalls have compounded concerns: Smokiez edibles were recalled from 85 stores in June due to pesticide contamination, Bud & Mary’s pulled products from 58 retailers for microbial violations, and Clearview Industries withdrew vape cartridges in August over pesticide issues.

Health experts warn that microbial contamination poses particular risks to people with weakened immune systems, while consumer advocates note that state recall notices often rely on obscure batch numbers, making it difficult for buyers to determine whether they purchased affected items.

These safety challenges coincide with financial strain on Colorado’s cannabis market. Annual sales dropped to $1.4 billion in 2024, down 37 percent from a $2.2 billion peak in 2021. Wholesale cannabis prices have reached record lows, fueling concerns that companies may be cutting corners on testing and compliance. Regulators from the Marijuana Enforcement Division continue to oversee recalls, but they do not disclose the total volume of cannabis recalled each year. Advocates argue that greater transparency is needed to rebuild consumer trust in the regulated market.

• For patients and consumers, the settlement involving Midnight Drops and the wave of recent recalls serve as reminders that products sold in licensed dispensaries are not immune to safety risks.
• For businesses, they highlight the dual pressures of shrinking margins and heightened regulatory oversight in an increasingly competitive and fragile market.