BOSTON (AP) — Massachusetts Secretary of State William Galvin says his office is planning to crack down on what he said is the growing number of Massachusetts-based businesses raising money from marijuana-related investments.
The Democrat said Wednesday that his office has seen an uptick in marijuana-related fraud cases.
Galvin said those engaging in fraud may exploit high-profile industries, such as marijuana-related businesses, to attract the attention of investors and take their funds.
He cautioned potential investors to be wary of unsolicited investment offers.
Galvin also said that while the cultivation and sale of marijuana is now legal in Massachusetts, it continues to be illegal under federal law.
He said federal and state chartered banks may refuse to accept deposits from the sale of marijuana-related products or refuse to make loans to marijuana-related businesses.
Secretary Galvin announces sweep of marijuana-related offerings, issues investor warning
BOSTON – Secretary of the Commonwealth William F. Galvin announced today that his Securities Division will begin a sweep of the growing number of Massachusetts-based business entities that are raising money from marijuana-related investments.
With his office seeing an uptick in marijuana-related fraud cases, Galvin has also issued guidance to investors who may be considering putting their money into the growing cannabis industry. The guidance comes after the Securities Division brought its second complaint involving marijuana in the last two months.
Galvin’s office brought charges today against David A. Caputo and his former company, Positronic Farms, Inc. for raising capital through the offer and sale of unregistered securities to at least 25 Massachusetts investors, as well as investors in eight other states. Galvin recently charged another Massachusetts man in connection with an unlicensed medical marijuana scheme that resulted in the loss of millions of dollars of investor money.
In his investor alert, Galvin is warning Massachusetts citizens that fraudsters may exploit high-profile industries, such as marijuana-related businesses, to attract the attention of investors and take their funds. He is cautioning potential investors to be wary of unsolicited investment offers which may be securities that need to be registered, as fraudulent investments are often sold by unlicensed, unregistered sellers.
Further complicating matters is the fact that, while the cultivation and sale of marijuana is now legal in the Commonwealth, it continues to be illegal under federal law, which affects the operation of marijuana companies. Federal and state chartered banks may refuse to accept deposits from the sale of marijuana-related products or refuse to make loans to marijuana-related businesses.
“No one regulator can police this marketplace,” Galvin said. “My Securities Division intends to scrutinize these offerings to proactively prevent investor harm.”
Investors are encouraged to contact the Securities Division at 1-800-269-5428 to check the registration status of any investment. The Cannabis Control Commission may also be contacted for more information at 617-701-8414.Office of the Secretary of the Commonwealth