Brand and Bluff
Kushy Punch, produced by licensed company Vertical Bliss, was once one of California’s most recognized edible brands—its compliant THC gummies were manufactured in a legal Chatsworth facility. However, behind the scenes, a second, unlicensed operation was running in parallel just a few miles away.
Tip-Off and Tail
In mid-2019, California state investigators received intelligence that Kushy Punch was supplying unregulated product to the market. Surveillance efforts tracked deliveries to a covert warehouse in Canoga Park—a site with no licenses, no permits, and fully embedded in the black market.
October 2, 2019 Raid
On October 2, 2019, enforcement agents raided the Canoga Park warehouse. Inside, they seized nearly $21 million in unlicensed goods, including 7,200 illegal vape cartridges, bulk distillate, and thousands of THC gummies prepared for illicit distribution. Company representatives attempted to explain the stash as “old inventory,” but regulators rejected the claim.
The Paper Trail
Documents found during the raid revealed that this was far from an isolated incident. Over an 18-month period, investigators estimated 3.3 million gummies had been manufactured off the books—valued at approximately $64 million—while the licensed facility continued regular operations.
How the Scheme Worked
The process was straightforward: manufacture untested products at the Canoga Park site → covertly transfer them into the Chatsworth facility → distribute them as if they were fully compliant. This allowed gummies to flow from what was essentially a “ghost kitchen” into illicit dispensaries (trap shops) without ever entering the state’s METRC tracking system.
License Revocation
By November 2019, the California Department of Public Health revoked Vertical Bliss’s manufacturing and distribution licenses. Overnight, Kushy Punch products disappeared from legal dispensary shelves.
Court Action
In September 2020, the state filed a lawsuit against Vertical Bliss, detailing millions of dollars in unlicensed production and sales. The case ultimately resulted in $128 million in penalties—the largest fine in California cannabis history.
Brand Reboot
Although the original owners lost control, the Kushy Punch name survived. Today, the brand is operated by a new company, Varavo, with legitimate licenses and reformulated gummies. The reboot marked a complete shift in ownership, distancing the current product from the scandal.
Industry Lesson
The Kushy Punch case became a cautionary tale for California’s cannabis industry. It revealed that even high-profile, award-winning brands could engage in “double dipping”—selling both in the regulated market and the underground. To regulators, the incident positioned Kushy Punch as the textbook example of a “fake legal” operation.
- Nugg Notes
sources:
• official press release (sep 24 2020) – “cannabis licensing authorities file civil action against vertical bliss (kushy punch) for unlicensed activity.” includes the state’s summary of the raid, 3.3 m illicit gummies figure, $64 m valuation, & license-revocation details. 
• mjbizdaily (oct 9 2019) – “ca vape maker kushy punch in spotlight amid allegations of illegal cannabis products.” first trade-press deep-dive; carries bureau-of-cannabis-control photo of products stacked on the warehouse floor (same shot shown above). 
• high times (oct 2019) – “kushy punch under scrutiny for allegedly making illegal vape cartridges.” recounts the oct 2 raid & company’s “old inventory” defense. good for legacy screenshots. 
• respect my region (nov 21 2019) – “bcc confiscated $21 m worth of kushy punch vapes & products.” short write-up with multiple high-rez photos of seized boxes (image #1 above). 
• california dcc / sfgate via ksbw (dec 8 2022) – “california company hit with $128 m fine over pot gummies.” breaks down the record judgment & notes defendants never appeared in court. 
• cannabis business times (dec 7 2022) – “california judge fines illicit cannabis operators $128 m.” useful for court-order language & daily-violation math (527 days × 3× license
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