Corruption in Cannabis Market Experiences a Crackdown

As expected in a new, loosely regulated industry, the cannabis industry is suffering from corruption. As a result, companies are cutting corners, while others are granting legal selling licenses of cannabis to foreign nationals.

Nevada Gov. Steve Sisolak on Friday announced he is creating a multiagency task force to “root out corruption or criminal influences” in the state’s legal cannabis market, spurred by federal charges filed against two businessmen with ties to President Trump’s personal lawyer, Rudy Giuliani. The announcement came a day after a federal indictment in New York detailed a failed attempt by a group with foreign ties to win a retail marijuana license in Nevada by donating money to the political campaigns of two state officials. The indictment charged two businessmen linked to Giuliani: Lev Parnas and Igor Fruman.

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In fact, the Governor of Nevada, Steve Sisolak tweeted that he formed a task force to combat corruption. These types of actions are necessary to keep the public safe from illicit products.

In addition, California is having corruption issues of its own.

The FBI interviewed marijuana industry officials in California’s capital city over the past few months about potential bribes made in exchange for license approvals and other favorable treatment, The Sacramento Bee reported Monday.

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Likewise, Sacramento officials were caught granting dispensary permits to foreign nationals of Ukraine.

The report about the probe comes a day after Sacramento officials called for an investigation into cannabis dispensary licensing, including the decision to grant eight dispensary permits to a group that includes a Ukrainian-born businessman indicted last week for allegedly violating federal campaign finance laws.

Similarly, a mayor in Massachusetts found himself in trouble when he accepted brides relating to cannabis enterprise.

And in Fall River, Massachusetts, at least four business owners allegedly paid a total of $600,000 in bribes to win Mayor Jasiel Correia’s support of marijuana license applications. Correia recently pleaded not guilty to multiple federal corruption charges.

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We are likely to see many more cases of corruption in the cannabis market, and we can assume that there are several government agencies currently tracking illicit activity.

Although corruption will never completely disappear, we do anticipate better regulation in 2020.