I cant count the number of times Ive warned potential investors about the cannabis industry being rife with fraud and bad behavior. With legalized cannabis still a relatively new industry and with states constantly changing their cannabis regulations, fraudsters can have a field day.
Cue the bizarre (though unsurprising) case of Portland-based dispensary, Cannacea, and allegations of cannabis investor fraud swirling around it. As reported by The Oregonian, [t]he Oregon Department of Consumer and Business Services ordered Tisha Siler, CEO of a Northeast Portland pot dispensary called Cannacea, to pay $40,000 in fines for multiple violations of state securities law, including selling securities without a license. You can read the Departments order against Cannacea and Siler here.
According to the order itself, in November 2014, Green Rush Consulting, a California cannabis consulting company which had worked with a felon previously convicted in a financial scam, helped Cannacea and Siler with a private placement memorandum for potential investors of Cannacea. The Department found this private placement memo contained multiple misrepresentations, includingthat Oregon regulators contacted and specifically invited Siler to open cannabis dispensaries in Oregon, and that Oregon regulators stated they would pre-approve or green light up to six of Respondents medical cannabis dispensary applications, ensuring [Siler] would sail smoothly through the application process. This pre-approval or green light was emphasized repeatedly throughout the PPM. In truth and in fact, no such statements were made by any Oregon regulator. Thecannabis business lawyers in my firm have seen many sketchy private placement memoranda, but this statement takes the cake as the most implausiblesince no regulatory authority would ever make such a promise to anyone.
In connection creating the PPM, Siler provided Green Rush with a letterthat purported to befrom the Oregon Health Authority Medical Marijuana Dispensary Program (the MMDP Letter). The MMDP Letter represented that Cannacea had received MMDP approval for six dispensary locations. The MMDP Letter was created on letterhead not used by MMDP, and it contained fabricated statements, and a forged signature of a regulator who did not even work with the Oregon Health Authoritys Medical Marijuana Dispensary Program.
The result from all of this is that Cannacea and Siler are blocked from doing business in Oregon and are required to pay$40,000 incivil penalties. Green Rush Consulting may continue providing consulting services in Oregon, but it is prohibited from ...
