Kushy Punch built its reputation selling THC gummies through California's regulated cannabis market. Behind that legal presence, the original account alleges, a separate unlicensed operation was producing and distributing gummies outside the state's tracking system.
Kushy Punch and Vertical Bliss
The original account identifies @kushypunchofficial, Kushy Punch, as a leading California cannabis edible brand. The company was produced by licensed operator Vertical Bliss. Its legal operation manufactured and distributed compliant THC gummies from a facility in Chatsworth, California. According to the caption, the brand had established a strong reputation in the regulated market. However, investigators later alleged that a separate, unlicensed operation was functioning nearby.
2019: Investigators Receive a Tip
In 2019, California state investigators received tips suggesting that Kushy Punch was moving unregulated products. According to the original account, investigators began tracking deliveries. Their investigation led them to a warehouse in Canoga Park, a short distance from the legal Chatsworth facility. The caption describes the warehouse as operating without: A cannabis license; Required permits; Authorization to manufacture and distribute regulated cannabis products. The location became the focus of the investigation.
October 2, 2019: The Canoga Park Raid
On October 2, 2019, state agents raided the Canoga Park warehouse. According to the original account, investigators discovered nearly: $21 million in unlicensed cannabis products. The inventory included: 7,200 illegal vape cartridges; Cannabis concentrates; Thousands of edibles prepared for distribution. The caption describes the products as intended for the illicit market. The discovery established the scale of the suspected unlicensed operation.
The "Old Inventory" Explanation
According to the original account, Kushy Punch representatives described the seized products as: "old inventory." Contemporaneous reporting (MJBizDaily, October 2019) narrows that explanation: company counsel said only the seized vape cartridges were old stock — a single box labeled for destruction, unusable after more than two years in storage — while regulators maintained the site was actively manufacturing and storing product. The dispute concerned whether the warehouse was simply holding older products or supporting an active, unlicensed production operation. The records recovered during the investigation became central to the state's case.
The Paper Trail: 3.3 Million Gummies
Investigators reportedly discovered production records indicating that the warehouse was not holding a one-time inventory. According to the original account, the records showed: 3.3 million gummies produced outside the regulated system over approximately: 18 months. The caption estimates the value of those gummies at: $64 million. These figures are presented as findings reported by the original account. They formed the basis for the allegation that unlicensed production had been operating alongside Kushy Punch's legal business.
How the Parallel Operation Allegedly Worked
The original caption describes an alleged system involving two facilities. The first was the unlicensed Canoga Park warehouse. The second was the licensed Chatsworth facility. According to the account, cannabis products were manufactured outside the regulated system in Canoga Park. They were then moved into the licensed operation and distributed in ways that made them appear compliant. The caption frames the endpoint as illicit dispensaries — trap shops — but the documented record runs the other way: the state alleged, and an unannounced visit to the Chatsworth facility supported, that Canoga Park product was inverted back into the regulated market through the licensed premises, an arrangement the Department of Cannabis Control itself called unusual.
METRC and the Missing Tracking Records
The original account specifically identifies METRC, the cannabis track-and-trace system. It alleges that the unlicensed gummies moved through the operation without entering METRC. That omission was significant because regulated cannabis products are supposed to be documented through required tracking. According to the caption, the products avoided the testing and reporting requirements associated with legal manufacturing. The account presents this as a central distinction between the company's licensed business and the alleged illicit operation.
November 2019: California Revokes the Licenses
By November 2019, California regulators had taken licensing action. According to the original account, the state revoked Vertical Bliss's: Manufacturing license; Distribution license. The revocations effectively froze Kushy Punch's original operation. The caption describes the brand's gummies disappearing from legal retail shelves almost immediately. The enforcement action demonstrated how the allegations affected the company's ability to operate in California's regulated market.
September 2020: The State Files Suit
On September 23, 2020, California's Attorney General filed a civil-penalty lawsuit against Vertical Bliss in Los Angeles County Superior Court. According to the original account, the state alleged millions of dollars in illegal cannabis production and distribution. The litigation followed the warehouse raid and license revocations. The caption identifies the lawsuit as the next major stage in the enforcement process.
The Reported $128 Million Penalty
The original account states that penalties ultimately totaled: $128 million. The documented record confirms the scale: on December 5, 2022, a judge awarded more than $128 million in civil penalties — the maximum the state sought — against Vertical Bliss, Kushy Punch Inc., two related companies and three individual owners jointly, calculated as three $81,000 licensing fees multiplied by 527 days of admitted unlicensed activity. A cannabis attorney quoted by SFGate called it "probably the biggest cannabis fine in state history."
Varavo and the Kushy Punch Relaunch
The Kushy Punch name did not disappear permanently. According to the original account, the brand later continued under a new company it names as Varavo. The documented record (GlobeNewswire, March 10, 2020) is more specific: Happy Brain Inc. licensed the Kushy Punch intellectual property, and Varavo — Happy Brain's wholly owned, licensed manufacturing subsidiary — put the gummies back on dispensary shelves that month. The name survived even though the original business structure did not.
The Industry Lesson: Legal Branding and Illicit Distribution
The original account presents the scandal as an example of a broader compliance problem. A company could hold legal cannabis licenses while allegedly maintaining separate, unlicensed operations. The caption describes this as licensed businesses continuing to feed the underground market. It also uses the phrase: "fake legal." The concern was not simply that illicit cannabis products existed. It was that a recognized legal brand could allegedly use the appearance of compliance while moving products outside the regulated system.
Legacy: The Limits of a Legal Label
The Kushy Punch scandal began with a prominent California edible brand operating legally through Vertical Bliss in Chatsworth. In mid-2019, investigators received information about suspected unlicensed distribution and traced activity to a Canoga Park warehouse. The October 2, 2019 raid reportedly uncovered nearly $21 million in products, including 7,200 vape cartridges, distillate and thousands of edibles. Records allegedly documented 3.3 million gummies produced outside the regulated system over 18 months, with an estimated value of $64 million. The original account describes products moving between the unlicensed warehouse and the legal Chatsworth operation, bypassing METRC, and being sold through illicit dispensaries. California revoked Vertical Bliss's manufacturing and distribution licenses by November 2019. The state sued in September 2020, and a December 2022 judgment awarded more than $128 million in civil penalties against the companies and owners jointly. Kushy Punch returned to shelves in March 2020 under a license to Happy Brain Inc., manufactured by its subsidiary Varavo. The original nuggnotes account presents the case as a warning that a legal cannabis brand's reputation does not guarantee compliance.
Sources
nuggnotes (@nuggnotes). "Gummies & Greed: The Kushy Punch Black Market Scandal." Instagram, July 24, 2025. https://www.instagram.com/p/DMg-yHXRHyL/
The original Instagram post behind this article.
Bureau of Cannabis Control and California Department of Public Health. "California Cannabis Licensing Authorities File Civil Action Against Vertical Bliss for Unlicensed Activity." Press release, September 23, 2020 (via MMJ Daily). https://www.mmjdaily.com/article/9253221/us-ca-cannabis-licensing-authorities-file-civil-action-against-vertical-bliss-for-unlicensed-activity/
The licensing authorities' own announcement: the Attorney General filed the civil-penalty complaint on September 23, 2020, in Los Angeles County Superior Court, alleging Vertical Bliss (dba Kushy Punch) ran unlicensed operations at an undisclosed Canoga Park premises and inverted illegally manufactured product back into the regulated market; the October 2, 2019 search warrants were executed "in response to tips"; seized records documented production of more than 3.3 million Kushy Punch gummies over an 18-month period worth an estimated $64 million; and Vertical Bliss simultaneously held manufacturing and distribution licenses for a Chatsworth premises, which were revoked.
Schaneman, Bart. "California vape maker Kushy Punch in spotlight amid allegations of illegal cannabis products; firm says goods not for sale." MJBizDaily, October 9, 2019. https://mjbizdaily.com/news/california-vape-firm-kushy-punch-in-spotlight-amid-allegations-of-illegal-cannabis-products-firm-says-goods-not-for-sale/166527/
Contemporaneous raid coverage: the BCC and the Department of Consumer Affairs' Cannabis Enforcement Unit served the warrant in Canoga Park on October 2, 2019, seizing nearly $21 million in illegal cannabis products including 7,200 vape cartridges, and the company's counsel said the confiscated cartridges sat in a single box "labeled for destruction," unusable because their batteries had died after more than two years in storage.
Schaneman, Bart. "Kushy Punch vape maker loses California cannabis license." MJBizDaily, November 22, 2019. https://mjbizdaily.com/news/license-revoked-for-california-vape-maker-kushy-punch-after-state-seizes-21-million-worth-of-products/175775/
Confirms California regulators revoked Vertical Bliss/Kushy Punch's license in November 2019 following the Canoga Park search; a BCC spokesman said the company was manufacturing and storing vape pens at the unlicensed facility, and the brand's IP holder (The More Agency) began seeking new licensed partners to keep making Kushy Punch products.
California Department of Cannabis Control. "DCC wins court victory against illegal cannabis businesses." Press release, December 2022. https://cannabis.ca.gov/2022/12/dcc-wins-court-judgement-against-illegal-cannabis-market/
DCC's official announcement that it obtained a court order awarding more than $128 million in civil penalties — the maximum DCC sought — in Department of Cannabis Control v. Vertical Bliss, Inc., et al., No. 20CHCV00560 (Los Angeles County Superior Court), after state authorities revoked Vertical Bliss's licenses; DCC noted one defendant remained outstanding and final judgment had not yet been entered.
Lange, Tony. "California Judge Fines Illicit Cannabis Operators $128M." Cannabis Business Times, December 7, 2022. https://www.cannabisbusinesstimes.com/business-issues-benchmarks/distribution/news/15688527/california-judge-fines-illicit-cannabis-operators-128m
Details Judge Stephen Pfahler's December 5, 2022 summary judgment: four entities (Vertical Bliss, Kushy Punch Inc., Conglomerate Marketing LLC, More Agency Inc.) and three individual owners admitted unlicensed manufacturing and distribution activity on 527 separate days, and the $128 million was calculated as three $81,000 licensing fees multiplied by 527 days under the Business and Professions Code.
"California Company Hit with $128 Million Fine Over Pot Gummies." SFGate, summarized by Goodwin, December 8, 2022. https://www.goodwinlaw.com/en/news-and-events/news/2022/12/12_08-california-company-hit-with-128-million-fine
Reports that investigators' unannounced visit to the licensed Chatsworth facility found evidence it was receiving Kushy Punch products from the illegal Canoga Park facility — illegally manufactured product brought back into the regulated market — and quotes a cannabis practice co-chair calling the $128 million "probably the biggest cannabis fine in state history."
Happy Brain Inc. "Happy Brain Licenses Iconic Kushy Punch Brand." GlobeNewswire press release, March 10, 2020. https://pnr-files.pro1.gus.wdc.dianum.io/globenewswire/articles/1997965/en/happy-brain-licenses-iconic-kushy-punch.pdf
Announces Happy Brain Inc. licensed the Kushy Punch intellectual property to manufacture and sell the brand throughout California, manufacturing through its wholly owned, licensed manufacturing subsidiary Varavo (CDPH license CDPH10002475), with gummies returning to dispensary shelves that month.
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