Evio Inc., a marijuana test-lab company formerly headquartered in Bend, notified investors Friday that it had surrendered licenses for two of its Oregon facilities in Bend and Eugene.
The company’s over-the-counter, or OTC-traded stock, ended the day at 39 cents per share Friday. The company went public in 2014 and at one point traded for more than $9 per share.
For the past six months, however, the stock has been trading below $1 per share, demonstrating the risks of the so-called “green rush.”
“This is basically a penny stock,” said Brian Stallcop, a certified financial planner with Sherpa Wealth Strategies LLC in Bend. “One investor could really move the needle on the price.”
Stallcop said he’s had clients inquire about marijuana investing, but it’s difficult to find solid public companies.
Although Evio is required to file financial statements with the U.S. Securities and Exchange Commission, it’s not traded on a major exchange. There are no minimum financial standards for OTC stocks.
Oregon requires all marijuana products to be tested for potency and contaminants. Evio was the first lab in Bend to be certified in 2016 after recreational marijuana was legalized.
Evio decided to close its Bend office and lab, which had limited capabilities, around the same time that the Oregon Liquor Control Commission notified Evio of license violations in December, President Lori Glauser said. The company’s need to consolidate operations to improve profitability also played a role in the decision, she said.
“It was a voluntary surrender,” Glauser said.
She added that she believed if Evio had wanted to continue operating those labs, it could have negotiated fines in lieu of surrender with the OLCC. Evio is serving Bend-area customers from its Tigard facility and also has a lab in Medford, Glauser said.
Evio came to regulators’ attention after a former employee, who had handled inventory, told the OLCC that instead of destroying the remains of marijuana product samples brought to the lab for testing, the company had allowed employees to take them off-site for personal use, Glauser said.
Glauser, company co-founder and CEO William Waldrop and chief science officer Anthony Smith accepted letters of reprimand for three violations in Bend, the OLCC announced Thursday.
Glauser and Waldrop also accepted letters of reprimand for 10 violations at the Eugene lab, the OLCC said.
When an OLCC inspector made inquiries in Eugene, Glauser and Smith told employees to conceal the company’s practice of allowing employees to take leftover marijuana samples, the OLCC stated. Glauser disputed the cover-up. She’d consulted with an attorney, who advised her to have employees direct questions to her, she said. Not destroying leftover lab samples “was definitely a bad policy, and I assume responsibility for that bad policy,” Glauser said. She added, however, Evio changed its practices after the OLCC issued clear guidance in 2017.
“I do not believe there was any risk of any employees selling the product or diverting it to the black market,” Glauser said. “Especially in the case of Bend, it was a very, very limited amount.”
The crackdown by Oregon regulators could hurt Evio’s efforts to grow in other states, Stallcop said. “It’s clearly a company that doesn’t have a compliance mindset in a heavily regulated industry. This is probably an existential threat to their business.”
Evio has a lab in Berkeley, California, and Glauser is working to open more labs in Southern California, where she is based, she said.
Evio also has an ownership stake in labs in Canada and Massachusetts, operates one lab in Massachusetts and licensed its brand and procedures to a lab in Colorado, Glauser said.
“We are continuing to move forward,” she said. “We have corrected the issues. This was an issue isolated really to Oregon.”
License violations aren’t the first bad news Evio investors have received.
The company addressed several issues in its Friday notice, including its failure to timely file a financial report for the fiscal year ended Sept. 30.
“The delays are directly attributed to the significant number of acquisitions and related audits of which occurred during the fiscal year,” the company stated.
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