Fraud and Scamming in the Cannabis Industry

By Julie Godard – Fraud and Scamming in the Cannabis Industry: Green Rush Consulting & Siler’s Cannacea

Dispensary fraud does happen – and this time it happened in Oregon to Green Rush Consulting, a reputable Oakland, California, company with a long history of positive cannabis investments. Tisha Siler, the owner of Cannacea (a former dispensary in Oregon) was found guilty of multiple violations against the state of Oregon and Green Rush Consulting, a company she hired in order to help her create marketing materials for private investors, which also helps ganjapreneurs earn cannabis dispensary and facility licenses. Siler created a fake letter approving Cannacea for additional dispensaries and then lied to Oregon state investigators, telling them that Green Rush Consulting created the letter themselves. As a result, Green Rush’s name was dragged through the mud a by a local newspaper article, without proper investigation. I myself reported on this story a few weeks ago, and Green Rush contacted me to let me know the story was incorrect. Here are the facts in the case, and here’s what you should know about it, whether you’re a cannabis investor, a cannabis entrepreneur, or an established player in the cannabis industry: be careful, because you can get scammed.

What Happened with Cannacea?

In order to bypass the Oregon Health Authority’s Medical Marijuana Dispensary Program’s (MMDP) approval process, Tisha Siler and Cannacea created a fraudulent letter from the MMDP, and used it to convince investors to contribute money to Cannacea. At least three investors then gave Siler and Cannacea up to $75,000 apiece to invest in six fabricated dispensary locations that the letter appeared to approve. In the court investigation, the letter was found to be printed on fake letterhead and contained “a forged signature of a regulator that did not even work in the MMDP.” The letter contained an unusual “personal invitation” to open up to six additional Cannacea dispensaries, stating that Siler’s company was pre-approved for the process and guaranteed to “sail smoothly through the application process.” A fraudulent panel position for Siler with the Oregon Liquor Control Commission, which works with cannabis regulation in Oregon, was also mentioned in the letter. It is clear from court documents that Siler and Cannacea deliberately deceived Green Rush Consulting, the state of Oregon, and investors.

How Was Green Rush Consulting Wronged?

When the fraudulent letter was discovered, Siler blamed Green Rush Consulting, whom she had hired in order to prepare an investor pitch book. Green Rush Consulting, an extremely reputable Oakland, California, medical cannabis consulting firm, had no idea that Siler or her Cannacea coworkers had created the fraudulent letter. Siler’s actions constitute “investment fraud in which an individual uses a new and potentially profitable industry as an enticement” for investors. Unfortunately, the letter looked real, and Green Rush Consulting had no reason to believe someone would act as dishonestly as Tisha Siler did in this case.

When The Oregonian reported on the story, Green Rush immediately hired a forensic computer company to find out where the fake letter came from, which turned out to be an account belonging to Siler and Cannacea. Katy Young, one of Green Rush Consulting’s attorneys, forwarded the forensic findings to the Oregon Department of Consumer and Business Services, which then linked the fraudulent letter to Siler. In the original Oregonian article, it was implied that Green Rush was also undergoing investigation for its “role” in the investment scam. Green Rush was duped just like Cannacea’s investors; but its failure to verify the MMDP letter’s accuracy led to the employee in question being let go from the Oakland firm. Green Rush was allowed to continue operating in the state of California, and is currently working with clients in Maryland and California as the states’ legalization efforts continue to move forward.

What Was Siler Ordered to Do in Court?

Siler was found liable for state securities fraud in the Oregon court case, which included creating fraudulent documents, making untrue statements of fact, and selling securities without a license. Cannacea as a business has been ordered by the State of Oregon Department of Consumer and Business Services to cease and desist all operations associated with the dispensary, and has been ordered to pay $40,000 in fines. In addition, Siler and Cannacea are permanently barred from conducting business in Oregon.

Advice from Green Rush Consulting

The owners of Green Rush Consulting, Sarah Cross Ceti and Zeta Ceti, agreed to an interview with me to clarify the situation. They confirmed that this is the first time they have been scammed by a dispensary owner like this, but that it is “not the first time we’ve dealt with people who have seriously misrepresented themselves.” Green Rush has been helping cannabis entrepreneurs win licenses for over six years, and negative experiences have run the gamut from people lying about who they are, who they know, their amount of capital, to their intentions. People have stolen from them (both monetarily and intellectual property-wise), hacked them, extorted money from them, and now they can add fraud to this list. In an industry as lucrative as the cannabis business, this is sadly to be expected. Sarah and Zeti stated, “We rely on background checks, online checks, and references, but at the end of the day, good people can still do bad things” – and bad people can do even worse things, as Green Rush recently found out. Their advice to other businesses on how to avoid fraud is to perform “due diligence” in every area of business – they also noted that “a lack of historical data in general” makes investigation into entrepreneurs difficult at times.

Green Rush Consulting was not just the victim of fraud in this case, but also irresponsible journalism, in which facts were not researched and ethical procedures were not followed. Green Rush noted that “We fully admit to our mistakes in this process…we also made sure all of our clients understood the full story and were transparent about everything.” In order to prevent future mistakes like the Cannacea case, Green Rush has put into place criminal background checks, reference checks, evaluations and formal interviews, full internet searches, validation, and then questions which help weed out would-be scammers. SOPs and behavioral analysis are also a part of defining client intentions for Green Rush. Although the Cannacea case has affected Green Rush’s procedures and may make them more complicated, it is important to note that this guarantees the integrity and value of the company’s future transactions for real clients.

What is Green Rush Consulting Doing Now?

Despite the inaccurate and negative press Tisha Siler’s lies, accusations, and fraud caused, Green Rush Consulting won their court case, cleared their name, and is now moving up and onward with many new projects. They were a large part of the Maryland’s recent license awards, and they secured both of the licenses they applied for (15 were awarded out of 124 applicants). Their clients received the first manufacturing and processing facility approval in California’s Arcata/Humboldt area, as well. Green Rush focuses on building the local cannabis community in California, hosting free industry socials with cannabis superstars such as Ed Rosenthal, Andrew DeAngelo, and Ellen Komp. Their new community center, to be launched soon, will provide free access for Oakland cannabis industry entrepreneurs with a welcome center, resources, programming, consultant/support, events, and more.

How Can You Avoid Fraud?

As Green Rush Consulting noted, the best way to avoid fraud is to go above and beyond in researching clients and their intentions – criminal background checks, face-to-face meetings, and contracts are a great way to go. (I have also been the victim of scams, believe it or not – people misrepresent themselves all the time, and no one seems to be above asking for a free ride in an expensive industry.) According to Hilary Bricken, an attorney at Harris Moure, PLLC in Seattle, Washington, the state of Oregon did well by acting to swiftly fine and bar Siler and Cannacea from doing business in their state. She also approves of the example the fraud case sets for investors, marijuana businesses, and state regulators, demonstrating what may happen if all don’t do their due diligence when investing, approving applications, and double-checking the facts. A lot of money is being thrown around in the cannabis industry, and this fast-paced growth can provide masks for dishonest people to hide behind. Check out my article on verifying cannabis business licenses and operations for hints and tips to avoid getting caught in a scam like Siler’s. Above all, be careful with your money and with the money of others, and don’t believe everything you read.

Julie Godard

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