On March 9, 2017, the Colorado Department of Regulatory Agencies announced that Colorado Securities Commissioner Gerald Rome has ordered John W. Long, Jr., of Nederland, as well as his marijuana businesses, Green Farms Consulting and Green Farms Holdings, to cease and desist offering and selling unregistered securities.
Green Farms had an advertisement on Craigslist for one month in the summer of 2016 to solicit $1 million from “accredited investors” in exchange for shares in Green Farms, with a minimum of $50,000 required for investors to participate in the offering and each share having a value of $1, as reported by DORA.
According to DORA, “An investigation found that at least one person responded to the ad … . A promissory note provided with the documents promised an interest rate of 10 percent per year with a return of principal within two years.”
The documents were considered unregistered securities and they were provided by an unlicensed representative, both of which violate the Colorado Securities Act.
“The presence of a new, popular, and seemingly lucrative industry like marijuana can be very tempting for investors looking to earn lots of money quickly,” Rome said. “But along with these offerings comes an extreme risk that is made even more intense based on the fact that we have seen multiple unregistered offerings pop up on sites like Craigslist in the last few years.”
Long isn’t the first marijuana businessman in Colorado to attempt to solicit investors from Craigslist. On July 16, 2015, the Colorado Division of Securities sent a cease and desist letter to Ryan Quinn for posting a craigslist ad that sought “high net worth investors to strategically partner with one of the largest MMJ chains in Colorado.”
Nearly four months later, on Nov. 12, 2015, the Colorado Division of Securities issued an alert on marijuana investments. The alert suggested that potential investors conduct meticulous due diligence, considering market volatility, federal illegality and the propensity for scam artists.