Anyone currently seeking to invest in marijuana should know this: the Financial Industry Regulatory Authority (FINRA) released a new Investor Alert titled Marijuana Stock Scams. Since medical marijuana became legal in 20 states and recent legislation allowed recreational use in two states, many investors have peaked interest into the cannabis industry, according to the FINRA press release.
There have been many phony pitches from sources using social networking sites, promotional webinars, or direct messaging through the internet. These scam artists encourage investors with false information to purchase small shares of a company with little to no history of well-rounded success. The goal behind these faulty investments is to sell their shares and leave the investor with an empty stock.
Gerri Walsh, FINRA’s Senior Vice President for Investor Education, warned in the press release that investors who are considering buying shares from a thinly traded company pushing elaborate claims should “question why a total stranger would tell them about a really great investment opportunity. In reality, there is likely no true opportunity. Investors should always find out whether the promoter is licensed using FINRA BrokerCheck, and check out the investment using the Securities and Exchange Commission’s EDGAR database of company filings.”
Brian Rabadeau is an intern with the Drug Policy Alliance.