Michigan Revokes Cultivation Licenses for Hongrui Enterprises, Inc.

Michigan Revokes Cultivation Licenses for Hongrui Enterprises, Inc.

Hongrui Enterprises Inc., a medical marijuana class C grower, has been permanently shut down after the Cannabis Regulatory Agency (CRA) issued consent orders and stipulations, revoking all four of the company’s state licenses. The CRA’s actions followed numerous formal complaints and on-site inspections that revealed a pattern of serious violations of the Medical Marihuana Facilities Licensing Act (MMFLA) and its administrative rules. These licenses cannot be renewed, reinstated, reissued, or reactivated.

The CRA first issued a formal complaint against Hongrui on July 13, 2021, and continued to issue complaints, including first superseding complaints, through August 23, 2024. The investigations revealed numerous violations:

• Inaccurate inventory tracking was a persistent problem, with discrepancies between the number of plants on-site and the records in the state’s Metrc system. The company also did not consistently tag plants, including mature marijuana plants.

• Hongrui failed to properly dispose of and record marijuana waste, specifically after being instructed to dispose of product that had spider eggs, but not logging the disposal in Metrc.

• The company demonstrated a lack of security, including leaving the business and interior rooms unlocked and unsecured, and garage doors used for transferring marijuana products were also left unsecured.

• A failure to maintain the required video surveillance was a recurring issue. The CRA found that the surveillance system was often not functioning, and the company did not retain footage for the required 30-day minimum, nor did they maintain an up to date surveillance log.

• The company possessed untagged marijuana plants and flower in various locations throughout the business.

• Hongrui exceeded the number of plants allowed under its licenses, with over 3,000 untagged plants found, surpassing the 6,000 plant limit. During another inspection, they had more than 10,000 plants on-site.

• Chemicals were improperly stored throughout the grow area, rather than in a secure, locked storage area.

• The business was not in compliance with fire codes. Exits and aisles were blocked, the fire protection system was disabled and inoperable, and the business lacked fire walls or separation.

• The company did not conduct criminal background checks on employees, and failed to provide requested employee information and standard operating procedures.

• Hongrui failed to report material changes to the CRA, including the installation of LED lights, and other construction.

• A freezer containing old, untagged product that should have been destroyed was discovered.

Hongrui acknowledged the factual basis for the complaints and agreed to the consent orders and stipulations, waiving their right to challenge the charges. The company was also required to cover all costs associated with the consent orders and may face further penalties for any additional violations. All remaining marijuana and marijuana products were destroyed under the supervision of the CRA on December 20, 2024. The consent orders were signed by CRA Executive Director Brian Hanna on January 19 and 21, 2025.

In addition to the license revocations, Hongrui Enterprises, Inc., along with Kevin Sea and Connie Zhao, have been placed on Michigan’s marijuana industry exclusion list, barring them from future involvement in the state’s licensed marijuana industry.