The Top Six Bogus Marijuana Industry Claims

Cannabis Business LawyersAs cannabis business attorneys, we tend to have a good pulse on what is going on in the cannabis industry and especially on the false claims people make about the cannabis industry. I’ve previously written about the top ten industry red flags and the top ten industry red herrings. In this post, I discuss the top six bogus claims we keep hearing about the marijuana industry:

  1. President-elect Donald Trump and appointee U.S. Attorney General Jeff Sessions will not impair state-legal marijuana. Nobody can know or even predict what this new administration will do with state-legal marijuana. President-elect Trump has been all over the place on cannabis and who’s to say whether he will remain consistent on states’ rights when it comes to marijuana (despite his campaign rhetoric)? What we do know is that so long as Congress continues to renew the medical marijuana protections in the appropriations riders, state law-compliant MMJ operators are unlikely to be shut down by the Department of Justice. Unfortunately, the same cannot be said of recreational marijuana businesses. Both a lot and a little has been made out of Jeff Sessions‘ confirmation hearing, but the bottom line is that he really didn’t say much one way or the other that helps to discern what will happen with cannabis in the next four years. In the end, it’s anyone’s guess as to what Trump and Sessions have in store for state-legal marijuana.
  2. CBD-Oil is legal everywhere in the U.S. Many “CBD” companies tout this claim and many consumers believe it to be true. CBD is not legal everywhere. The DEA considers CBD with active THC to violate the federal Controlled Substances Act and it recently made this clear when it announced that it considers CBD derived from hemp to be illegal and made clear that it will be stepping up enforcement actions against online and interstate CBD sales. We’ve previously written on how the FDA goes after anyone making medical claims for CBD, whether for humans or pets.
  3. Florida medical marijuana is going to be huge. I have been getting a steady stream of calls and emails from folks wanting a Florida medical marijuana license or to start preparing for registration to start a Florida cannabis business under Amendment 2. Far too many of these people see Florida as an opportunity for nearly guaranteed riches. The problem is that Florida cannabis is already dominated by seven Charlotte’s Web nurseries and this will not change unless Florida opens its medical marijuana marketplace to others. Not only that, even if Florida allows new applicants for cannabis licenses, its application process will surely be expensive, lengthy, and full of red tape. So though Florida’s cannabis industry will eventually be huge, in the meantime, patience is called for and you should avoid any and all “how to get rich quick on Florida cannabis” seminars and pot “colleges.” In the meantime, here’s our primer on some of what you can and should do now to prepare for Florida licensing/registration.
  4. I’m just a landlord to a marijuana business so I cannot be criminally liableUnfortunately for landlords, they can face criminal prosecution for aiding, abetting and conspiracy under federal law and also asset forfeiture. Just look at what happened to the landlord in the Harborside case if you still believe otherwise — thankfully, that case was eventually dismissed. If you are a landlord to a cannabis business, you should get educated on your criminal liability and on federal and state forfeiture laws. Most importantly, your lease agreement should be drafted to ensure your tenant behaves.
  5. Yesterday, I was a criminal defense attorney. Today, I’m a marijuana securities and business lawyer. We hear of this sort of claim constantly and guess what, 99 times out of 100, you would be better off using a business lawyer with no cannabis experience than a criminal cannabis lawyer who now claims to know complex business and securities laws overnight. The sad truth is that criminal cannabis lawyers in states that have legalized cannabis are finding themselves without clients and they are having to scramble to re-brand themselves as cannabis business lawyers. But branding and reality are two very different things, and firms with actual expertise in both business law and marijuana regulatory law are far too often called on to clean up expensive messes left by these unqualified lawyers. For tips on how to choose an experienced cannabis business attorney, go here.
  6. The cannabis industry is worth billions so I need to invest now, now, now. I never tire of writing about the hustlers and hucksters who insist investors immediately dump gobs of money into the marijuana industry. I received an email just last week with the following advertisement:


The $100 billion marijuana industry is dominated by penny stocks. With legalization sweeping the country, these penny stocks have already begun skyrocketing in price. Take action TODAY, and you have a once-in-a-generation opportunity to turn a tiny $50 investment into an absolute fortune.

Federal illegality makes it difficult to secure a bank account and the IRS continues to tax the industry to death under 280e. Cannabis investors can face criminal liability (just like landlords) and they can find themselves subject to asset forfeiture for financially supporting illegal entities and activities. Due to the newness of this industry, fraud is not uncommon. Investment in the ancillary, support sectors (like tech or real estate development) is a bit more straightforward and a bit less risky, but all investors in cannabis need to be vigilant, especially until we get a better feel for what the Trump administration has in store for us. For more on marijuana stock fraud and scams, see here and here.

So the next time you hear anyone make a too-good-to-be-true statement about the cannabis industry, at least be sure to check it out before buying in.