Gov. Tim Walz's choice to lead Minnesota's new cannabis office quit the job Friday, just a day after she was appointed, following revelations that she had sold illegal products at her hemp shop.

Erin DuPree told the DFL governor she would "not be going forward" as director of the Office of Cannabis Management. The Star Tribune had first reported on her hemp shop's sale of illegal products earlier in the day.

"Conducting lawful business has been an objective of my business career," DuPree said in a statement Friday evening. "However, it has become clear that I have become a distraction that would stand in the way of the important work that needs to be done."

Loonacy Cannabis Co., which DuPree founded in Apple Valley in July 2022, advertised and sold noncompliant vapes and edible products containing more THC than is legally allowed, according to the store's social media videos and online product listings that have since been deleted.

Lab results for the products, still visible on Loonacy's website, show that some contained elevated THC levels that are illegal and synthetic ingredients that are banned.

"We have a responsibility to assure Minnesotans that this emerging market will be safe, lawful, and well-regulated," Walz said in a statement Friday evening. "We're making progress toward implementing this work."

In a news release only a day earlier, Walz's office praised DuPree as a leader who has a record of "maintaining compliance with state laws and regulations." As director of the Office of Cannabis Management, DuPree would have been tasked with overseeing the creation of the state's legal marijuana market and the rules that govern it.

The blunder raises questions about how thoroughly the governor's office vets applicants. In July, Walz rescinded an appointment that he'd made to a state broadband task force after the Star Tribune questioned his office about the appointee's past domestic abuse allegations.

It also deals a blow to the state's fledgling recreational marijuana industry. Without a permanent director, the still-forming Office of Cannabis Management may need longer to write rules and issue licenses for growers, processors and retailers. Already, licensed dispensaries outside of tribal reservations are not expected to open until 2025.

Charlene Briner, a state government veteran, has been serving as interim director and helping set up the office.

DuPree was set to start Oct. 2 with a salary of $151,505, according to the governor's office.

Leili Fatehi, a longtime legalization advocate who worked closely with state legislators as they passed Minnesota's recreational marijuana law, expressed serious concerns about DuPree's history in a statement earlier Friday.

"Appointing someone without the necessary qualifications, who is an active member of the very industry they are meant to regulate, and who has shown a past disregard for compliance, is a textbook example of regulatory capture," Fatehi said. "Such a decision risks establishing a culture of noncompliance at the very top levels of our state's oversight of this nascent industry."

Banned cannabinoids

On its TikTok account, Loonacy touted edible products containing 10 milligrams of THC per serving and 150 milligrams per package. State law allows hemp-derived edibles to contain a maximum of 5 milligrams of THC per serving and 50 milligrams per package. The TikTok page was deactivated by Friday.

Loonacy was also selling noncompliant vape cartridges on its website up until late Thursday — hours after Walz had publicly named DuPree as the first director of Minnesota's Office of Cannabis Management, according to timestamped screenshots shared with the Star Tribune. Some of the vapes available on Loonacy's website contained banned cannabinoids like HHC, THC-P and Delta-10.

In a video posted to Loonacy's now-inactive TikTok account, DuPree talked about California-made Goliath vape pods with a "proprietary blend" of cannabinoids, many of which are illegal in Minnesota, according to the product's lab report.

"I love this product, we brought this in because it's something I would use on a regular basis, and I do," she said in the video.

@loonacy_mn via Tiktok

DuPree said in an interview Wednesday that she had planned to close Loonacy before starting in the state role. Minnesota's marijuana law prohibits the Office of Cannabis Management director from holding a direct or indirect stake in a cannabis business.

In her statement Friday, DuPree said: "I have never knowingly sold any noncompliant product, and when I became aware of them I removed the products from inventory."

Before opening Loonacy, DuPree said she had been a consultant for startup businesses for nearly 20 years. DuPree, who has never worked in government, likened setting up Minnesota's new cannabis agency to launching a large startup.

Walz's office highlighted DuPree's work as founder and vice president of Cook and Quinwood Consulting on Thursday, describing it in the present tense. But that business has been listed as "inactive" by the Minnesota Secretary of State's Office since February.

DuPree previously ran a home-cleaning business and was recently a sales consultant for a flooring company, according to public filings.

She has faced financial troubles over the past decade, public records show, including several federal tax liens and lawsuits.

Tightening restrictions

Regulations and enforcement were loose when Minnesota first legalized hemp-derived THC products last year. Many products were already being sold in the state in a legal gray area since the 2018 federal farm bill opened the door to cannabis compounds derived from hemp.

The recreational marijuana law passed this spring added additional penalties for non-compliant hemp-derived products. It is now a gross misdemeanor, with a fine of up to $3,000 and up to a year in jail, for someone who "sells an edible cannabinoid product knowing that the product does not comply with the limits on the amount or types of cannabinoids that a product may contain."

Hemp and marijuana are both cannabis; the difference is that hemp contains less than 0.3% THC, the main intoxicating compound in cannabis, and is legal under federal law.

Many of the hemp-derived products Loonacy was selling may not even be able to be sold at licensed adult-use marijuana dispensaries when they open. Novel cannabinoids like the highly potent THC-P remain poorly understood.

Star Tribune staff writer Rochelle Olson contributed to this story.