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This story was republished with permission from Crain’s Detroit.

Michigan regulators have stripped the marijuana grower licenses from an Albion operation under scrutiny from law enforcement.

The state’s Cannabis Regulatory Agency announced a consent order Thursday against Albion-based Hongrui Enterprises Inc. prohibiting the grower from operating in the state and permanently banning its owners, Kevin Sea and Connie Zhao, from participating in the industry.

The legal closure of Hongrui is mostly procedural. The operation had never made a legal sale in the market, had never passed a safety inspection and its weed had never passed quality testing, according to the CRA.

The consent order was agreed upon by regulators and Hongrui, avoiding an often lengthy and contentious administrative judicial process.

“Licenses (for Hongrui) are permanently closed and will not be renewed, reinstated, reissued, or reactivated, limited or otherwise, at any future date,” the CRA said in a press release.

Sea is a Chinese national and accountant in New York, and potentially never even saw the Michigan operations.

It’s suspected that the operation attempted and failed to grow quality, mold-free marijuana for the legal market, instead turning to the illicit market, including importing and exporting black-market marijuana to and from Michigan.

The CRA was in the dark on its operations for most of its existence, until the Illinois State Police intercepted a van transporting marijuana from Oklahoma en route to Albion in 2023.

An Illinois state trooper pulled over a rented Chrysler Pacifica in Sangamon County near the state capital of Springfield. The driver, a Chinese national, appeared nervous, according to police records. The driver informed the officer he had flown from New York to Oklahoma and was driving to Michigan. He didn’t know who he was meeting; he only had a cell phone number and an address, police said. Inside the vehicle, officers discovered black bags containing 193.8 pounds of marijuana packaged in 170 vacuum-sealed bags.

Coordinating with the Michigan State Police, Illinois State Police allowed the delivery to continue and the van made its way to a nondescript building northwest of downtown Albion.

MSP cased the area and raided the property days later. Officers had to air out the building before entering as the smell of decaying plants and mold spilled out. A dog chained inside had defecated on the floor, according to investigative reports accessed by Crain’s under the Freedom of Information Act.

The building, officially licensed by the state to grow 6,000 marijuana plants for medicinal use, held 9,298 plants and 236 pounds of packaged marijuana. The relative street value of the cannabis at the time would have been in excess of $600,000.

Despite the strong evidence, Sea and the group of Chinese nationals, many unwittingly participating in the crimes, faced no prosecution after the court ruling and the Calhoun County district attorney dismissed any and all charges.

A Michigan Court of Appeals ruling, around the time of the MSP raid of Hongrui, interpreted the state’s Michigan Regulation and Taxation of Marihuana Act to eliminate felony charges on grower operations, legal or illegal, of any size.

Illegal growers like Sea and others could only face a 90-day misdemeanor and a meager fine for their crimes.

That court reinterpreted that ruling last year to put felony charges back on the table.

Nevertheless, even though Hongrui’s licenses were revoked and its marijuana product confiscated by law enforcement, there’s no guarantee it hasn’t moved to another building and resumed operations without the CRA’s approval.

Though if caught this time, its operators would likely face felony charges.

“The CRA prioritizes the integrity of the legal market and we will continue to enforce the rules and laws to make sure that licensed businesses are all on the same level playing field,” David Harns, spokesperson for the CRA, wrote in a statement to Crain’s.