SEC Files Charges Over Alleged MMJ Investment Scam

Wall Street regulators filed civil fraud charges against a company and four people allegedly caught up in a scheme to bilk investors out of nearly a million dollars through a company purported to be a Massachusetts medical cannabis venture.

The Securities and Exchange Commission charged that the head of the operation raised $550,000 from investors between 2011 and 2012 through a Denver company, Lionshare Ventures, the Boston Globe reported. The man used the money for unauthorized expenses like groceries and pet care, the SEC said.

He also allegedly used the money to take control of a firm called Cannabiz Mobile Inc., a penny stock, and between 2012 and 2015 the four individuals sold shares of the company – touted as a medical cannabis company – and filed false statements with the SEC.

Cannabiz investors eventually lost nearly $1 million, according to the charges, the Globe reported.

The charges could serve as a warning to potential cannabis industry investors, given that the vast majority of public marijuana companies trade on over-the-counter market or as penny stocks, like Cannabiz.

The allegations also indicate that regulators are keeping an eye on public marijuana companies, and that the companies will probably be held to the same – if not higher – standards than other publicly traded firms.


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5 comments on “SEC Files Charges Over Alleged MMJ Investment Scam
  1. Ryder Management on

    In relation to this blog, it was horrifying to see the new list of licensed producers in Canada – since the Supreme Court struck down the MMPR’s in which Health Canada could issue licenses. Since the Feb/16 ruling, how is it that HC can issue grow only licenses, without public’s knowledge.

    If you search the new cultivators for a website, and check ‘investor info’ – they seem to be penny stocks – publicly traded. How is it possible for the government of Canada to issue grow only licenses before announcing new regulations?

    • Bruce Ryan on

      The rules and regulations constructed under the Conservative government have been adjudged a violation of the Charter by the courts. Nuanced decision…. the existing scheme continues until such time as the Liberal government crafts regulations regarding social / recreational use.

  2. tas on

    one would surmise the hoops to jump through
    for cannabis are different
    because its non corporate power
    if it was gmo weed it would be much better

  3. Sandy Murphey on

    Standards seem to be different depending on who’s involved in creating and upholding them. Then there’s compliance and enforcement. Some enforcers will look the other way if they stand to benefit. That’s the way the game is played, and the little people usually pay the price. I don’t live in Canada, but I wonder if HC is financially benefiting from issuing the licences, without regard to any new regulations. Once they have the money from licences, would they care what happens afterwards? It seems opportunistic, which is going to be happening a lot more.

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