The Oregonian has reported a story about the dramatic demise of an Oregon cannabis retailer, Cannacea, which is now being investigated for fraud. The dispensary informed the Department of Health that it is closing temporarily, but its website is down, its listings on Leafly and Weedmaps are gone, and its Twitter account was deleted.
Cannacea was founded by Tisha Siler in 2012, and she received what she thought was her medical dispensary license from Oregon in October 2014. It turns out, though, that the letter announcing it was fake. Siler claims that her consultant, Green Rush Consulting, fabricated it. The Department of Health learned of the letter in June 2015 and began to investigate in October.
According to The Oregonian, Siler had paid California-based Green Rush Consulting, which she found online, $25K to help it draft materials to present to potential investors. It turns out that her contact at the consultant was a convicted felon who joined the company after responding to a job ad on Craigslist and who created, according to Siler, marketing materials that contained false statements. It’s not clear what role she played in their creation.
The Oregonian named four investors in Cannacea, some of which relied on the investment solicitation materials prepared by Green Rush Consulting. One was a Canadian, Paul Mann, who helped solicit additional investors after investing $168K himself. One of those investors was Harvard Properties, a real estate investment firm in Canada that bought the land for the dispensary and a cultivation site. Harvard Properties has filed claims against Siler for failure to pay rent.
The demise of Cannacea, which still isn’t fully understood, offers a cautionary tale for both cannabis business entrepreneurs as well as investors. Business operators need to be extremely cautious in vetting consultants, especially those who promise to help them raise capital, while potential investors need to be aware of not only the risks associated with any startup but also the presence of many unscrupulous intermediaries involved in raising capital for the industry while just looking for a quick buck.
Read Noelle Crombie’s “Portland pot dispensary targeted in Oregon marijuana industry’s first fraud investigation”: http://www.oregonlive.com/marijuana/index.ssf/2016/07/pot_dispenary_is_target_in_ore.html