Colorado Securities Commissioner Fred Joseph announced today that he has entered a final cease and desist order against a Colorado medical marijuana company and its owner for allegedly violating the securities registration provisions of the Colorado Securities Act (“Act”) in connection with the offer of securities in Colorado. Named in the Order are Colorado Wellness Providers, LLC, and its owner and manager, Charles E. Perry, both of Fort Collins, Colorado.
The Staff of the Colorado Division of Securities (the “Staff”) alleged that Perry sought to raise capital from investors for the “medicinal marijuana industry” and, in particular, his company, Colorado Wellness Providers. The Staff alleged that Perry placed several advertisements on “Craigslist” seeking $50,000 in capital to finish his facility. In the ad, Perry promised an “excellent return on a short term investment.” Also, the investment purportedly was to be collateralized by a marijuana crop that would be insured by Lloyds of London. In addition to the ads on Craigslist, the Staff alleged that Perry published an article seen on the internet entitled “The Great Startup Game: Colorado’s Marijuana Economy: an Explosion of Ganjaprenuership.” Following the article in a comment, Perry again solicited potential investors for his company, promising a “great” return on investment.
The Staff alleged that Perry failed to register his security offering and, by offering the investment opportunity to the public at large through the use advertisements on “Craigslist” and the internet, Perry was unable to take advantage of any private offering exemption under the Act. Commissioner Joseph cautioned investors about investing in the latest fad or unknown companies with no proven track record. "Investors need to protect themselves by exercising common sense, and ignoring Internet hype for stocks of unknown companies," said Commissioner Joseph.
The cease and desist order, which Respondents agreed to, orders them to immediately and permanently cease and desist offering or selling any “security” in or from the State of Colorado in violation of the anti-fraud, registration and licensing provisions of the Act or otherwise engaging in conduct in violation of any provision of the Act.
A copy of the Order can be found at: http://www.dora.state.co.us/securities/enforcement.htm#CeaseDesist
