The FBI last year announced that it was seeing increased fraudulent activity and bribery of public officials and the U.S.
Securities and Exchange Commission issued a similar call, warning about Ponzi schemes and other types of securities fraud.
Meanwhile, the industry is also being targeted by cyber criminals, who are looking to exploit weaknesses in the cyber security of cannabis-related businesses.
Below is wrap-up of what’s ailing the industry.
officials for licenses, and urged public cooperation in rooting out corruption.
On the podcast, FBI spokeswoman Mollie Halpern said: “As an increasing number of states change their marijuana legislation, the FBI is seeing a public corruption threat emerge in the expanding cannabis industry. States require licenses to grow and sell the drug,
opening the possibility for public officials to become susceptible to bribes in exchange for those licenses.”
Late last year, the Sacramento Bee reported that the FBI was investigating whether Sacramento-area marijuana businesses had made payoffs to public officials in the region in exchange for favorable treatment and license approval.
And in March of last year, the Sheriff of Siskiyou County called the FBI after he received envelopes stuffed with thousands of dollars in cash from a mystery stranger who had asked him to keep deputies away from some illegal cannabis farms. The FBI investigated and eventually arrested and charge two men for attempting to bribe the elected sheriff.
Before that, in 2013, the then-mayor of the city of Cudahy was sentenced to a year in federal prison for taking bribes in exchange for supporting the opening of a medical marijuana shop in the city.
One of the most high-profile cases that the SEC pursued involved a Colorado stock promoter who was investigated for fraud. He and two of his companies agreed to pay $4.2 million in December
2019 to settle the charges for fraudulently promoting and trading a cannabis stock.
And in January, the SEC filed a lawsuit against a California and a Washington man, accusing them of operating a pyramid scheme that raised $4.85 million to fund a licensed Washington cannabis business that didn’t exist.
In January, there was a significant data breach involving software that is widely used by cannabis dispensaries. The breach involved an unsecured and unencrypted database containing approximately 85,000 files that included sensitive medical data and was left exposed to anyone who came across it on the internet.
Data of about 30,000 people was exposed in that hack on THSuite, a cannabis point-of-sale provider, including photo IDs, addresses and protected health information.
Likewise, as the industry is in its infancy, companies are typicaly small and do not have resources to protect against hackers and cyber attacks.
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