Oregon Ruling: Cannacea Founder Created Fraud, Not Green Rush ConsultingGage PeakeAugust 2, 2016
The first reported fraud in Oregon’s cannabis industry found resolution last week as the Oregon Department of Consumer and Business Services ordered Tisha Siler, founder and CEO of Cannacea, to pay $40,000 in fines. Siler was found liable for multiple violations for state securities law, including creating fraudulent documents, making untrue statements of fact, and selling securities without a license.
The long saga, first reported last month in the Oregonian, involved the creation of a fraudulent letter from the Oregon Health Authority’s Medical Marijuana Dispensary Program (MMDP). The letter purportedly gave Siler and Cannacea a “green light” to open six dispensary locations in Oregon. Siler then allegedly used the letter to convince investors to buy shares in the company. At least four people invested based on that information, putting up sums ranging from $50,000 to $75,000 each.
According to an Oregonian report last month, Siler told state investigators that Green Rush, a medical marijuana consulting firm based in Oakland, Calif., fabricated the letter without her knowledge. Siler had hired Green Rush to help prepare an investor pitch book.
In the Oregon Department of Consumer and Business Services notice order released last week, Department Director Patrick Allen wrote that “to the contrary, the MMDP letter was created by Siler, or by another at her direction.”
The state inquiry concluded that Siler clearly knew the letter was fabricated and that it made bogus claims about her enterprise in an effort to lure investors.
Siler told the Oregonian via email that she plans to file a challenge to the department’s findings. She denied preparing the fraudulent letter and added she did not “ask or direct anyone to do so. Period.”
Agency spokesman Jake Sunderland told the Oregonian the case against Siler is a “classic example of investment fraud in which an individual uses a new and potentially profitable industry as an enticement” to get support and backing of an illegitimate company. Sunderland advised potential investors to do their homework before committing money to any company.
Officials at Green Rush Consulting, the California firm that worked with Cannacea, said they were duped by Siler. Soon after the original Oregonian story broke, Green Rush hired a company with forensic computer expertise to determine where the fake letter originated. Katy Young, an attorney for Green Rush, told the Oregonian that the computer expert determined the letter came from an account associated with Cannacea and Siler.
Young said she forwarded the findings to Dorothy Bean, an attorney with the Department of Consumer and Business Services. According to Sunderland, it was that analysis that led the state to link the letter to Siler and Cannacea.
Siler’s attorney, Frank Elsasser, told the Oregonian that he and Siler were disappointed with the decision. "The state's order appears to be based upon only a small portion of the record submitted, relies upon evidence from unreliable sources, and makes no reference to any evidence submitted in support of Cannacea," Elsasser said in a statement. Leafly’s efforts to reach Elsasser and Siler were unsuccessful.
Oregon state investigators found that Green Rush’s consultant, who no longer works for the firm, failed to independently verify the accuracy of the information in the counterfeit health authority letter. As a result, Green Rush is prohibited from engaging in any business activity related to securities in Oregon without permission from the Department of Consumer and Business Services. The company can continue to offer consulting services in the state.