As jurisdictions across the globe legalize cannabis and entrepreneurs look to grow their fortunes, fraudsters lie in wait ready to exploit this burgeoning multibillion-dollar industry. The author, an accountant with expertise in legal cannabis businesses, details the types of schemes affecting the industry and what fraud examiners should know about preventing fraud in this growing field.
The first sign of trouble for medical cannabis firm Juicy Fields appeared in July 2022 when its investors couldn't access their accounts. They'd been able to watch their plants — and fortunes — grow on Juicy Fields' online platform, but now they were locked out of the site. The firm's owners froze investors' accounts and scrubbed Juicy Fields from social media platforms. Then they disappeared like a puff of smoke. As it usually goes with Ponzi schemes, the Juicy Fields' operation had imploded, becoming one of the biggest scams to hit the legal cannabis industry.
Seeded in Berlin in 2020, the online investment firm Juicy Fields billed itself as a "cannabis-crowd-growing platform" that needed investors, or "e-growers," who'd get rich by funding medical cannabis growing operations. According to a 2022 article by Vice, Juicy Fields' marketing team used Telegram, small news sites and online cryptocurrency forums to promote the business and, for investments of 50 to 180,000 euros, e-growers could reap returns of 70% and 168% per year, once their plants were harvested and sold. At one point, its owners boasted having 500,000 investors.
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