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CANNABIS INVESTMENT FUND STEALS $3.3 MILLION

The SEC filed a compliant against Michael E. Cone and Greenview Investment Partners, L.P., a cannabis investment fund, for securities fraud.  From August 2017 through March 2018, Cone, a convicted criminal, used an alias and a boiler room to fraudulently raise $3.3 million from 60 investors across 26 states. Marketing materials indicated that investor's fund would be invested in cannabis related businesses that would generate a 24% annual return. In reality, Greenview had no prior  track operational track record or investment success. The money was used to fund Cone's personal expenses, including several luxury cards, and a substantial portion of the money was used to pay ponzi scheme investment returns.

The FBI raided Greenville's offices in February 2018 and seized $1.4 million in cash and assets including Rolex watches, a 2017 Bentley Flying Spur and a 2015 Rolls Royce Wraith. In March 2018, Cone was arrested on an outstanding warrant in Reno, Nevada.

The SEC also released an Investor Alert that highlights the risk of investing in cannabis related stocks.  The SEC states that investors should be wary of any unregistered person contacting them with an investment opportunity that offers a fixed, large rate of return.  

Investor Alert:  Marijuana Investments and Fraud
www.sec.gov/oiea/investor-alerts-and-bulletins/ia_marijuana

 

CA PASSES BILL: PENALTIES: POT SALES TO KIDS

The California Assembly passed the third reading of SB-1451 Licenses: sale to underaged persons: penalties.  The bill would provide the Bureau of Cannabis Control (Bureau) with the authority to revoke or suspend the license of a medical or recreational retailer or microbusiness that sells or provides marijuana to someone who is under the legal age of 21 or permits the underage person to consume cannabis on the licensed premises.  The suspension or revocation would be applicable to the license for the premises where there cannabis was sold, provided or consumed.  The bill also provides the Bureau with the authority to bring additional sanctions against the licensee for the violations.

CANADA ISSUES ADVERTISING WARNING

Canada posted an informational bulletin for licensed producers discussing the restrictions on cannabis advertisements and the corresponding penalty for non-compliance.  Canada's Food and Drug Act (FDA) prohibits advertisements for food or drugs as a treatment or cure for certain diseases published by the government.  In addition, labeling and advertisements must not produce a false impression as to the product's character, value, quantity, composition, merit or safety.  

Licensed producers should seek guidance from local counsel to ensure that advertisements and labeling comply with the FDA as penalties can range from $250,000 to $5,000,000, or to a term of imprisonment ranging from six months to two years, or to both.

Advertising Prohibitions on Cannabis - Information Bulletin
www.canada.ca/en/health-canada/services/drugs-medication/cannabis/licensed-producers/advertising-prohibitions-cannabis-information-bulletin.html