The good and the bad of Missouri’s American Shaman 7-OH settlement | Hudnall
Missouri Attorney General Catherine Hanaway announced what sounded like a major victory Thursday.
American Shaman, the Kansas City company that helped popularize the highly addictive gas station drug known as 7-OH, agreed to stop selling its kratom-derived products in Missouri.
The agreement resolves a lawsuit Hanaway filed in March alleging that the company’s products were illegal opioids, that its marketing practices violated state consumer-protection laws, and that warehouses storing the products qualified as “drug dens.”
Under the settlement, American Shaman has agreed to leave the Missouri market, stop advertising to Missouri consumers and, within 30 days, put safeguards in place intended to keep its products from being sold here. If the company violates the agreement, it could face a $5 million penalty.
The settlement also prevents American Shaman from selling a range of emerging kratom-derived compounds, including MGM-15, MGM-16 and pseudoindoxyl. That’s important because companies like Shaman are always chasing the next loophole. By targeting these drugs now, the state may have gotten ahead of the next wave.
All of that is good. American Shaman founder Vince Sanders is one of the big dogs in a booming industry built around selling pills, powders and shots that deliver cheap and sometimes dangerous highs. His company has made a fortune selling 7-OH products across the country while addiction counselors, poison control officials and regulators increasingly sounded the alarm.
Thing is, though, American Shaman is not simply a retailer selling 7-OH in its own stores and online.
The company already has far fewer Missouri retail locations than it did just a few years ago. More important, a large part of American Shaman’s business involves manufacturing products for other brands, a practice also known as white-labeling. If you’ve walked into a smoke shop and seen a wall of 7-OH products, there is a decent chance American Shaman made some of them, even if its name doesn’t appear anywhere on the packaging.
The attorney general’s office says the settlement “has provisions that prohibit the sale, facilitating the sale, and transfer of kratom products for retail in Missouri.” Does that mean American Shaman can no longer manufacture products for companies that sell 7-OH in Missouri? How would that be monitored and enforced?
I asked the attorney general’s office about that and didn’t get a clear answer. But if the settlement doesn’t cover the white-labeling piece of American Shaman’s business, the company isn’t really banned from selling in Missouri.
Kratom laws still fuzzy
The settlement also arrived after an interesting turn in the case.
In May, a Jackson County judge declined the state’s request for a temporary restraining order that would have immediately halted American Shaman’s sales. The judge said the parties had presented competing expert evidence and that additional testimony and evidence would be needed before the court could determine whether the state was likely to succeed.
That process never happened. Instead, the case settled less than a month later.
So while American Shaman largely agreed to do what the state had been asking a judge to order, there was never a ruling on the lawsuit’s underlying claims. The court never decided whether 7-OH products were illegal under existing law, whether the state’s opioid arguments were correct or whether warehouses storing the products could be treated as drug dens.
And neither did the legislature. Lawmakers spent much of the session debating whether to ban 7-OH before those efforts ultimately stalled.
Ultimately, then, the settlement arrives in a somewhat unusual place. Missouri’s biggest 7-OH company has agreed to leave the market, yet neither a judge nor lawmakers ever fully resolved the bigger debate over how these products should be regulated. Meanwhile, the actual details of the settlement are murky. We don’t really know how much teeth this thing has.
So, sure, call it a win for Hanaway and Missourians. She forced a major player out of the Missouri market and extracted concessions that a judge was not prepared to order on an emergency basis.
But the larger problem remains. Until lawmakers are willing to establish clear laws around these products, Missouri will continue fighting these battles one company at a time.
