Cannabis promoter gets $4 million fine from SEC after allegedly misleading investors
Colorado is full of leaders in the marijuana industry thanks to the state’s early legalization of the plant. Some have used their position in the industry to mislead consumers unfortunately and have been met with harsh penalties.
Jeffrey Friedland, a Colorado cannabis businessman, was fined $4.1 million by the U.S. Securities and Exchange Commission after the agency alleges he misled investors when he promoted stock in 2016 and 2017 for OWC Pharmaceutical Research, according to Market Watch.
The SEC alleges Friedland had a secret deal with OWC, getting paid with stock to promote the company to U.S. media outlets and investors. The SEC says Friedland didn’t disclose that he received 5.1 million shares of OWC for the promotions. The cannabis businessman is also accused of planning to unload his stock into an inflated market, despite initially claiming he wanted to be a long-term investor.
OWC’s stock rose for a penny up to $2.20 a share while Friedland was promoting the company, according to Market Watch. The stock has dropped back down to a penny.
Like any other business, get rich schemes in the marijuana industry are often short lived and lead to severe consequences. Starting a legit marijuana business in Colorado involves numerous fees, applications and licenses.
The first step to forming a marijuana business entity is filling out applications with the State and local jurisdiction, where an individual’s background check is processed by the state. Conditions that could disqualify an individual from receiving a Colorado marijuana license includes:
- Felony charges (the law has changed over the years and a felony conviction does not necessarily prevent a person from becoming licenses)
- If you have any outstanding delinquencies from judgments, taxes or penalties from the Department of Revenue related to a marijuana business
- If your authority as a primary caregiver has been revoked
Those who are in law enforcement, part of a local licensing authority, a licensed physician making marijuana patient recommendations or are younger that the age of 21 are prohibited from receiving a Colorado marijuana license.
Once an applicant is approved by the state, a marijuana business must be licensed for every type of work it intends to perform. The licenses include retail and medical stores, cultivation, manufacturing, testing, and transporting, which allows an entity to provide operational services to retail marijuana establishments.
As one can see from the application process and various licenses, becoming successful in the marijuana industry takes far more effort than spreading misinformation to boost stocks. For those serious about creating a business in Colorado’s marijuana industry, retaining attorneys experienced in marijuana law is one of the smartest moves you can make.