Investment scams are always popular and with good reason. People are constantly looking for big returns on what may appear to be the hot stock or investment sector of the moment. Greed can sometimes blind people from doing the thorough research that should be done before getting involved with any investment. With both medical marijuana and to a lesser extent recreational marijuana use expanding, some scammers are seeing this as an opportunity to scam people out of their investment dollars with phony marijuana related investments. Many of the companies involved with legalized marijuana sales are too small to be required to file reports with the Securities and Exchange Commission (SEC) and consequently there can be a better chance of false information being used to lure investors. However, the SEC through its Microcap Fraud Task Force has been looking at the information being disclosed by companies dealing with marijuana to see if the information is misleading. The SEC has the authority to issue trading suspensions while the SEC continues a more in depth investigation. Last week the SEC did just that in the case of FusionPharm, Inc. a Colorado company that purports to make a cultivation system used in the growing of legal marijuana. The SEC has also suspended the sales of Cannabusiness Group, Inc and Advanced Cannabis Solutions, Inc. for the same reasons.
Don’t let your greed prevent you from doing your homework before making any investment. Always make sure you not only understand how the investment works, but also research the company and the person selling you the investment before making any investment. Small companies, often called Penny Stocks, may look attractive and may be legal, but it is difficult to get information about many of these companies and the risk of fraudulent stock sales are increased.