Almost as soon as Alison Ettel’s colleagues in the Bay Area cannabis industry recognized her as “#PermitPatty,” they began purging her products from their shelves.

Several Bay Area marijuana dispensaries said they will no longer carry TreatWell Health products after Ettel, the company’s founder, was outed as the notorious white San Francisco woman caught on a viral video supposedly calling police on an 8-year-old African American girl for selling water without a permit.

TreatWell spokeswoman Cynthia Gonzalez said Tuesday Ettel had resigned from the company. "It is Ms. Ettel's belief that TreatWell, its employees and patients should not have to suffer because of a situation that occurred in an escalated moment," Gonzalez said.

Ettel's resignation followed days of criticism from former TreatWell customers.

“Compassion is supposed to be at the forefront of this industry, and to see the way this has played out — with a complete disregard for a child’s wellbeing — I think it was a disappointment,” Katie Rabinowitz, general manager of Magnolia Oakland, said in an interview Monday.

Rabinowitz said she won’t be ordering any more TreatWell products and discounted the business’s leftover inventory. The proceeds from the remaining sales, she said, will be given to the girl who was selling the water, and to Black Girls Code, a San Francisco nonprofit focused on providing technology education for African American girls.

Other dispensaries have done the same.

Berkeley Patients Group on Sunday announced on social media that it would no longer be selling TreatWell products, as did SparkSF.

“Profits from our remaining inventory will be donated to Cinnamongirl Inc, an Oakland-based mentoring organization for ambitious girls of color,” Berkeley Patients Group wrote.

TreatWell was founded in 2015, according to its website, though the Secretary of State’s database does not show any company by that name registered in California. It manufactures cannabis tinctures that are marketed for both humans and pets. A 1 oz. bottle sells for roughly $80 retail.

Rabinowitz said Monday evening that she expects to sell out of the TreatWell products in the next 24 hours. The inventory of mostly tinctures used for pain relief should bring in between $1,500 and $2,000, she said.

“We’re a women-run company, and we value integrity,” she said. “This is not the first company that we’ve ceased relationship with because of their morals.”

The infamous episode erupted Saturday when a video posted to Instagram from the day before showed Ettel on a cell phone outside her San Francisco apartment. The woman recording the video accused Ettel of calling police on her 8-year-old daughter, who was selling $2 bottles of water outside of her South of Market apartment building.

“This woman don’t want to let a little girl sell some water. She be calling police on an 8-year-old little girl,” the woman recording the video says, walking after Ettel. “You can hide all you want. The whole world gon’ see ya, boo.”

“Yeah and, um, illegally selling water without a permit?” Ettel says back.

The controversial run-in soon exploded online and Ettel began feeling the wrath of enraged social media users accusing her of being racist. Soon the “Permit Patty” moniker hit and a meme was born.

The incident was the latest viral encounter in which a Bay Area resident was captured on video and accused of racism. In April, a white woman dubbed “BBQ Becky” was recorded calling police on a black couple using a charcoal grill in a non-approved area at Lake Merritt in Oakland.

Ettel did not immediately return messages from The Chronicle on Monday. But on Saturday, she told The Chronicle that she only pretended to call police after an argument with the girl’s mother escalated. She said she lost her temper after the girl had been making noise outside her apartment for hours.

Still, that doesn’t sit well with cannabis industry insiders like Rabinowitz. She said she’s had lunch with Ettel and spoken at events with her and when she saw the video, she immediately recognized the woman.

Rabinowitz said the cannabis industry has long operated in a gray area. Marijuana is still federally illegal, and vendors keep that in mind, she said. “In the cannabis industry, there’s an unspoken rule: Don’t snitch,” Rabinowitz said.

Ettel’s own company, which also sells products for pets, is even more legally sketchy given that cannabis is not approved and regulated for use on animals. In a 2015 interview with The Chronicle, Ettel said, the practice is “kind of like ‘don’t ask, don’t tell.’”

Evan Sernoffsky is a San Francisco Chronicle staff writer. Email: esernoffsky@sfchronicle.com Twitter: @EvanSernoffsky