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Sep-02-2019 00:31printcomments

FBI Scrutinizing the Cannabis Industry for Corruption

The FBI is looking at many issues including antitrust issues, CBD medical claims, and bankruptcy filings.

cannabis hemp
Image: Bonnie King

(SALEM, Ore.) - The FBI has announced an investigation into the emerging cannabis industry, especially in Western states. FBI spokeswoman Mollie Halpern confirmed the news earlier this month.

Specifically, the organization will look at whether public officials may be taking bribes in exchange for growing and operating licenses.

Long Licensing Process

All cannabis-legal states require a license to operate in the cannabis industry. But the licensing process is long and can be backed up.

Halpern asked listeners to contact their local FBI field offices if they suspect a dispensary is operating illegally. Halpern shared at least one case where public officials were selling cannabis business licenses for as much as $500,000.

Cannabis legal experts say the issues highlight the need for regulatory action to stop lucrative backstreet deals.

Bribery Allegations

Several bribery allegations in California have prompted the public concern. Both Illinois and Michigan have approved a legal recreational cannabis industry in their states.

The FBI is looking at many issues in the industry including antitrust issues, CBD medical claims, and bankruptcy filings. Many cannabis experts believe the nature of the industry makes it more open to potential corruption. Limited licenses may be a driving factor for corruption.

The process can lead to crazy valuations, which make a cannabis business license like winning the lottery. A 2017 federal indictment was handed down to three men after they tried to bribe Detroit city councilors. Two of the men were sentenced to prison, while another is on supervised release.

What Can Be Done?

Addressing cannabis legalization at the federal level would help with these issues tremendously. Right now, each state is left to deal with making the drug legal in their own way. There is no standard set of rules and implementations, which means each state does it differently.

Until issuing a cannabis license runs as smoothly as a Walmart TV return policy, for example, there is always the potential for corruption. Licensing boards across legal states operate on different principles. Some western states like Oregon have had to pause their licensing application process due to so many applicants.

Regulation Going Forward

Regulation should be thoughtful but not obstructive, which can increase corruption. The whole idea behind the legalization of cannabis is to prevent backroom dealing. Keeping licenses feeling like a lottery process helps breed corrupt deals and crazy valuations.

Canada legalized cannabis at the federal level last year. It was the first G7 and G20 nation to do so, setting down federal guidelines for the production, acquisition, and consumption of the cannabis plant. Under that act, only producers licensed by the government can grow cannabis.

There are at least 117 licensed producers so far in Canada, with those numbers growing. With so much regulation, many people are afraid of smaller "craft cannabis" retailers and producers will be edged out of the market. Right now, the Canadian cannabis market faces marketing challenges since most cannabis product marketing resembles tobacco marketing.

Tobacco marketing is expressly forbidden in Canada, creating a grey area when it comes to packaging and advertising.

Source: Special Features Dept.


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Daryl September 18, 2019 4:36 pm (Pacific time)

When an industry grows as fast as the cannabis has there is a catch up factor in the regulatory aspect. Considering all other political venues, one should not be surprised to hear the word bribe or be shocked by manipulators attempts at gaining favor or edge. Think of pharmaceutical companies and the edge they have.

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