Two Oklahoma Attorneys Charged with ‘Ghost Owner’ Medical Cannabis Scheme

Two Oklahoma attorneys have been charged with falsifying records, cultivation of a dangerous substance, and multiple counts of conspiracy after allegedly putting their legal assistants’ names on more than 400 cannabis cultivation applications.

Full story after the jump.

Two Oklahoma attorneys have been charged with having their legal assistants lend their names to medical cannabis cultivation applicants, helping their out-of-state clients around residency requirements, The Oklahoman reports. The practice is referred to by officials as “ghost owners.”  

Eric Brown and Logan Jones were each charged with multiple counts of conspiracy, falsifying records, and cultivation of a dangerous substance. Oklahoma Bureau of Narcotics (OBN) investigators said they interviewed four employees of the Jones-Brown law firm who admitted their names were used to apply for medical cannabis grow licenses with the state. 

Announcing the charges last week, Attorney General John O’Connor said there are more than 400 grow operations in the state that “listed the Jones-Brown law firm employees as the owners.”  

Ken Adair, who is representing Brown, said that the two were no longer partners and that his client’s “conduct and knowledge of what went on is inconsistent with the mental state or criminal intent required to violate the law.” 

One legal assistant told investigators that she was paid $3,000 for each license she put her name on, and at least $1,000 was paid back to the law firm. She said she “was meeting with clients so frequently this was the only type of work she was doing,” according to court documents outlined by The Oklahoman. 

OBN Director Donnie Anderson said the two attorneys had represented foreign individuals who were growing cannabis and shipping it out of state. 

This year, the state has passed several laws to reign in the state’s medical cannabis industry, including a bill that raises the penalties for transferring medical cannabis to non-patients. Gov. Kevin Stitt (R) earlier this month signed a measure to make the state Medical Marijuana Authority a standalone agency which House Majority Floor Leader Jon Echols (R), the bill’s co-author, told The Oklahoman would help officials deal with the complexity of regulation and compliance” industry and help “cut down on the black market” which he argues “threatens the wellbeing of Oklahomans and properly regulate the legitimate businesses approved by voters.”  

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Industry perspectives on this story:

It's frustrating and amazing that in an industry that already carries with it a higher risk profile in terms of business risk, compliance risk and reputation risk, that some players take actions that introduce more risk. Yes, we are still emerging as an industry from the gray markets to the legal markets, but this is another unfortunate example that trying for short-cuts rarely works out. And especially when there are a lot of eyes on us from prohibitionists to those undecided about legalization to the capital markets. The good news is that this can hopefully serve as a warning to others. There is a lot of opportunity in cannabis, but doing it the right way will ensure that entrepreneurs can make money over the long-term.

Chip Schweiger - Founder, The Green Leaf CPA

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