TELL ME about the weed fraud case!
WEED, FELONS, forgeries, lawsuits, California swindlers, and duped Canadian backers—the weed fraud case had it all.
The culprits in this story are a Northeast Portland dispensary called Cannacea, its owner Tisha Siler, a California group called Green Rush Consulting, and, per the Oregonian, a Green Rush independent contractor who did hard time for wire fraud. Siler, Cannacea, and Green Rush were busted last month for especially bad behavior.
In November 2014, Green Rush helped Cannacea and Siler with a private placement memorandum (PPM) for potential Cannacea investors. A PPM is an intense legal document provided to would-be investors by a business selling stock or other securities. The Green Rush document was a bright red flag: Even most lawyers are unqualified, and therefore unwilling, to draft a PPM. Green Rush Consulting, however, seemed pretty comfortable with it.
This particular PPM contained a few outlandish lies, including that Oregon regulators preselected Siler to open pot dispensaries in Oregon, and pre-approved six new business locations. Investors were also shown a forged letter repeating these and other whoppers. Among the investors is a naïve Canadian man who claims he ponied up $168,000. (That particular fellow is more likely to show up on a South Park episode than recover his cash.)
At some point, relationships went south and people began to sue. The state stepped in to investigate, resulting in Siler and Green Rush pointing fingers at one another in the newspapers. Siler elected to lie a little more, stating she did not draft the forged letter, and Green Rush argued (apparently convincingly) that it relied on Siler’s statements that the letter was legit. In this way, Green Rush dodged the title of “most dishonest consultant,” but probably wins “dumbest.”
Siler was fined $40,000 and Green Rush was fined $20,000, with part of that suspended. Oregon may not collect on much of that, and I’d be more surprised if the investors are repaid. Although some investors could easily win their lawsuits, a judgment is just a piece of paper if there are no assets to reach. Parties like Siler tend to be uncollectible, which is a shame.
The weed fraud case is interesting because of the utter lack of sophistication involved: From the beginning, the chance of this particular fraud succeeding was virtually zero. Still, wealthy people threw all sorts of money at Cannacea. That happens fairly often in cannabis. In my estimation, fortunately, most bad pitches lack planning and mechanics, rather than good intentions.
A common-sense takeaway here is that if something seems too good to be true, it probably is. The state does not promise licenses in the form of sweepstakes letters. Another takeaway is that so-called “consultants” rarely add value in the cannabis game. And finally, if you plan to fork over money, screen the deal with someone knowledgeable. Truly, this fraud case had it all.