CO Officials Warn Against Marijuana Investment Scams

Despite $700 million in marijuana sales last year alone, Colorado officials are warning investors to think twice before putting their money into cannabis companies.

The reason: There’s a relatively high risk of getting sucked into a scam.

The Colorado Division of Securities has put out an alert that cautions investors against betting capital on a trio of investments it considers risky: marijuana-related companies, binary options and digital currency.

“What they all have in common is their recent emergence as three investments that both sellers and buyers hope will become the ‘next big thing,’” Colorado Securities Commissioner Gerald Rome said in the alert. “Marijuana investment opportunities could be particularly susceptible to scams, such as ‘pump-and-dump,’ in which promoters use misinformation to pressure investors to get in on the ‘ground floor.’”

The warning comes at a time when a string of marijuana-related companies have announced significant capital raises, often in the seven-figure range.

In terms of public companies, marijuana-related stocks are listed on the thinly traded over-the-counter market, where financial reporting requirements are minimal. That makes it difficult for investors to determine the true health of a business – and in some cases even figure out what the company does.


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2 comments on “CO Officials Warn Against Marijuana Investment Scams
  1. Seth Tyrssen on

    Creeping capitalism rears the dark side of its ugly head, as greedy cheats begin to appear. We warned of this, in the Temple of Ankh’n’Abis, and urge once again that the business of the Sacred Herb be kept in the hands of The People — not speculators who know nothing of the true nature of cannabis. Hail, Ankh’n’Abis, guiding sentient spirit of the Sacred Herb.

  2. Brett Roper on

    1) Wonder how officials arrived at a relatively ‘high’ chance assessment; 2) lumping the Cannabusiness space in with binary options and bitcoin plays based upon what … 3) The consistent and growing tax base supporting schools and othet social initiatives; the tens if thousands of jobs created for Colorado’s economy; the ancillary financial impact (positive) on Colorado’s economy; the reduction in suicide rates compared with other prescriptive drug use metrics; the recent return of millions of dollars of tax overpayments from the industry to schools and awareness programs? … I strongly suspect there other far more swindles going on in Colorado’s other financial channels than the occasional misplacement of trust in the Cannabusiness Industry due to a lack if sophistication and due diligence.

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