During the past few months, the U.S. Securities and Exchange Commission (“SEC”) Division of Enforcement has continued to police the areas of the cannabis industry that roll over into the SEC’s jurisdiction.
In March, the SEC charged American Patriot Brands, Inc. (“APB”), a cannabis cultivation and distribution company, its CEO, other officers, and affiliated entities for their participation in a long-running scheme in which the company and its owners allegedly raised more than $30 million from more than one hundred investors across the country and siphoned off millions of investor dollars to enrich themselves. In a more recent case, in late May, the SEC obtained a temporary restraining order and froze the assets of a purported Las Vegas-based cannabis products company after alleging that the company was operating a $60 million Ponzi-style scheme. The SEC alleged that “WeedGenics”, a d/b/a of Integrated National Resources, Inc. (“INR”), and its two owners made Ponzi-like payments and enriched themselves by millions. One owner served as INR’s primary investor relations representative and the other owner served as INR’s vice president.
Source: SEC Cannabis Enforcement Continuing to Grow this Past Spring | Foley & Lardner LLP
