The state of Colorado filed a lawsuit against three cannabis companies, resulting in a subsequent temporary ban in state-licensed dispensaries. Nuka Enterprises LLC, Sima Sciences LLC and Nuka Properties LLC, the separate entities responsible for the manufacturing, production and distribution of the cannabis brand “1906,” reached a $400,000 settlement due to undisclosed health risks. Co-founder Peter Barsoom was also named in the lawsuit.
“Colorado’s cannabis regulations are the nationwide gold standard for protecting consumers, and the companies in this case broke the law by failing to disclose potential health risks from their products,” Attorney General Phil Weiser said in a recent press release.
“With this action, I am holding the companies and one of its co-founders accountable to ensure they face consequences for their deceptive business practices. I will continue to hold accountable those who evade Colorado’s cannabis and consumer protection laws.”
The companies may be able to initiate production once certain standards are achieved. Any violations will result in an added fine of $600,000.
The current settlement traces back to 2020, in which reports involving the cannabis-infused edible “Midnight Drops” and liver issues began to bubble above the surface of Colorado’s beaming cannabis industry. Although Midnight Drops, which was sold by Sima Sciences, LLC, was touted as a sleep-aid; it failed to provide consumers with accurate descriptions of both health benefits and risks associated with the product.
And again in 2023, state officials warned consumers about potential side effects, specifically “elevated liver enzymes that may indicate acute liver injury,” citing the use of a Corydalis rhizome extract as a possible cause. Although limited, existing research on Corydalis has been associated with liver damage and inflammation.
Sima Sciences, LLC claimed that Midnight Drops “produced on or after March 1, 2022,” did not use Corydalis in production; stating that a different plant extract, Stephania, was used. Regardless, the companies responded by halting the production of Midnight Drops altogether and agreed to eliminate the drops from dispensary shelves.
Instead, the opposite occurred; Midnight Drops remained available for purchase. Attorney General Weiser’s office furthered their claims and concluded that the companies provided insufficient research on the use of both Corydalis and Stephania in their products. Similarly, the companies did not convey reports of side effects to their retailers.
Cannabis products geared towards promoting sleep have quickly become a deep pocket of the cannabis industry. A 2025 survey conducted by the Sleep Foundation found that 77% of men and 64% of women, aged 21-64, use marijuana as a sleep aid. Yet, an influx of demand in the cannabis industry rarely translates to cohesive data involving potential health risks and benefits alike. Federal restrictions that classify marijuana as a Schedule I substance, one that is defined as having no medical value, continue to limit the research that is conducted on marijuana sold in dispensaries.
Colorado, which alongside Washington, was one of the first U.S states to legalize recreational cannabis, has rightfully earned its title of an American cannabis hub. Although the statewide ban is temporary, the move signals a reminder of the importance of accountability, particularly in a place where cannabis has long been legal. The cannabis industry is one that seems to thrive on novelty; larger markets fall victim to oversaturation, where skirting statewide regulations can become commonplace, if you’re not careful.