Pubdate: Thu, 18 Aug 2016
Source: Portland Mercury (OR)
Column: Ask a Pot Lawyer
Copyright: 2016 The Portland Mercury
Author: Vince Sliwoski


Of Pot, Felons, and Duped Canadians

TELL ME about the weed fraud case!

WEED, FELONS, forgeries, lawsuits, California swindlers, and duped 
Canadian backers-the weed fraud case had it all.

The culprits in this story are a Northeast Portland dispensary called 
Cannacea, its owner Tisha Siler, a California group called Green Rush 
Consulting, and, per the Oregonian, a Green Rush employee who did 
hard time for wire fraud. Siler, Cannacea, and Green Rush were busted 
last month for especially bad behavior.

In November 2014, Green Rush helped Cannacea and Siler with a private 
placement memorandum (PPM) for potential Cannacea investors. A PPM is 
an intense legal document provided to would-be investors by a 
business selling stock or other securities. The Green Rush document 
was a bright red flag: Even most lawyers are unqualified, and 
therefore unwilling, to draft a PPM. Green Rush Consulting, however, 
seemed pretty comfortable with it.

This particular PPM contained a few outlandish lies, including that 
Oregon regulators preselected Siler to open pot dispensaries in 
Oregon, and pre-approved six new business locations. Investors were 
also shown a forged letter repeating these and other whoppers. Among 
the investors is a naive Canadian man who claims he ponied up 
$168,000. (That particular fellow is more likely to show up on a 
South Park episode than recover his cash.)

At some point, relationships went south and people began to sue. The 
state stepped in to investigate, resulting in Siler and Green Rush 
pointing fingers at one another in the newspapers. Siler elected to 
lie a little more, stating she did not draft the forged letter, and 
Green Rush argued (apparently convincingly) that it relied on Siler's 
statements that the letter was legit. In this way, Green Rush dodged 
the title of "most dishonest consultant," but probably wins "dumbest."

Siler was fined $40,000 and Green Rush was fined $20,000, with part 
of that suspended. Oregon may not collect on much of that, and I'd be 
more surprised if the investors are repaid. Although some investors 
could easily win their lawsuits, a judgment is just a piece of paper 
if there are no assets to reach. Parties like Siler tend to be 
uncollectible, which is a shame.

The weed fraud case is interesting because of the utter lack of 
sophistication involved: From the beginning, the chance of this 
particular fraud succeeding was virtually zero. Still, wealthy people 
threw all sorts of money at Cannacea. That happens fairly often in 
cannabis. In my estimation, fortunately, most bad pitches lack 
planning and mechanics, rather than good intentions.

A common-sense takeaway here is that if something seems too good to 
be true, it probably is. The state does not promise licenses in the 
form of sweepstakes letters. Another takeaway is that so-called 
"consultants" rarely add value in the cannabis game. And finally, if 
you plan to fork over money, screen the deal with someone 
knowledgeable. Truly, this fraud case had it all.
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MAP posted-by: Jay Bergstrom