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* Tribune…
[Illinois’ cannabis legalization law] has bonuses for minority owners, which [CEO of Marijuana Business Daily, Cassandra Farrington] believes is laudable but could encourage fraudulent minority ownership controlled by white investors. That in turn could lead to lawsuits challenging state cannabis licenses.
“It is ripe for fraud. You’re going to have a lot of straw man agreements,” said Farrington, whose publication also hosts a leading annual marijuana business expo. “Because of all of that, you’ll see a lot of that end up in court.” […]
The current law is meant to prevent fraudulent ownership by requiring disclosure of all owners with more than 5% interest and disclosure of any management agreements.
“It’s absolutely something we’re mindful of, because you hear a lot of stories about shenanigans in other states,” [Sen. Heather Steans, D-Chicago] said. “It’s something we’ll try to keep being proactive to prevent.”
Minority ownership scams have been a mainstay of Chicago politics for decades. And even though there are no specific racial minority set-asides in this bill, that’s why the law was written to require disclosure of management agreements and all owners over 5 percent. But even that may not be enough.
* I also reached out to Rep. Kelly Cassidy (D-Chicago), the bill’s House sponsor. Her texted response…
We talked a lot during drafting about how the industry had found ways to work around everything that had been done elsewhere and shared concerns they’d try here. It’s why there are strict rules on disclosure of not just ownership but on management agreements, a common tool for that trick.
That said, we’re hearing rumors of folks trying to find ways around our laws too, so that’s on the list of items we’re discussing in the trailer bill.
As Sen. Steans noted, this needs to be an ongoing process because people will dream up all sorts of ways to scam money.
* Related…
* Are pot businesses finally getting access to banking services?: In what would be a crucial milestone for the cannabis industry, the U.S. House passed a bill that would change the cash-only nature of the business
* Press Release: Illinois State Treasurer Frerichs Urges Swift Passage of Federal SAFE Banking Act
posted by Rich Miller
Thursday, Sep 26, 19 @ 11:33 am
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The best way to prevent licensing fraud is to require licenses to be renewed every five years or so, rather than granting in perpetuity.
Comment by Juvenal Thursday, Sep 26, 19 @ 11:41 am
Treat it exactly like alcohol…end of story.
Comment by Moby Thursday, Sep 26, 19 @ 11:52 am
I don’t think there are any minority preferences in the Recreational marijuana law. The preferences relate to social equity to attempt to remedy a past arrest or living in an area caught up in the war on drugs.
Comment by Mish Mash Thursday, Sep 26, 19 @ 1:04 pm
=[Illinois’ cannabis legalization law] has bonuses for minority owners, which [CEO of Marijuana Business Daily, Cassandra Farrington] believes is laudable but could encourage fraudulent minority ownership controlled by white investors. That in turn could lead to lawsuits challenging state cannabis licenses=
There is no bonus points for MBE/WBE or veteran owned companies. The points are awarded to social equity applications and the state is required to do a disparity study. By the time the disparity study is done, most of the licenses will be issued.
Nothing in the bill gives points to minority business owners UNLESS they are from impacted areas.
Comment by {Sigh} Thursday, Sep 26, 19 @ 3:58 pm