Cannabis Ventures is just one of more than 1,000 Canadian companies seeking a license
Across the border, legalization of pot sales for recreational use in Colorado and Washington state sparked a similar frenzy to find investors.
In May, the U.S. Securities Exchange Commission bluntly warned about “pump-and-dump schemes” after it suspended the fifth marijuana company in two months. (Pump-and-dump is where a promoter hypes a stock, pushing the price up and then the principals sell, skimming substantial profits before the price crashes back to pennies.)
“When publicly available information is scarce,” the SEC said, “fraudsters can more easily spread false information about a company, making profits for themselves while creating losses for unsuspecting investors.”
Among those involved in the United States is Raymond Dabney, whom retired Sun columnist David Baines once described as “one of the most outrageous promoters I have ever met.”
Dabney is now managing consultant at Cannabis Science Inc., even though in 2010 the SEC ordered Dabney and three others to pay a total of $1.4 million for stock manipulation.
In 2005, Dabney was kicked out of the B.C. securities market for five years and fined $30,000 after he issued 22 false news releases for his company Xraymedia Inc.
Meantime back in Canada, I’m sure it was only coincidence that the decision to change the rules around medical marijuana production happened on April Fool’s Day.
Even before that, B.C.’s corporate registry was humming with numbered companies transforming into cannabis growers and mining companies morphing into pot producers.
Leading the pot parade, along with some names familiar with the glory days of Howe Street, are politicians and celebrities, who are popping up as directors, advisers and executives. But so far, the only companies signing them up are those without Health Canada licenses.
Health Canada confirms there are 314 companies under active consideration. Only 22 applications have been approved so far, and only three of those are among the multitude being publicly traded.
The rest are trading on the imprimatur of big names and the hopes and dreams of all the money to be made. To get an idea of how much, consider that the licensed OrganiGram Inc. trades in the $2.40 range, while the unlicensed Vodis Innovative Pharmaceuticals (previously Southbridge Resources) trades at 40 cents.
Vodis recently added sitting Liberal Senator Larry Campbell to its advisory board. He’s being paid in stock options — 250,000 at 40 cents.
Also on the board is John Reynolds, a Conservative bagman, former speaker of the B.C. legislature, former MP and former Howe Street stock promoter.
Ethicists told The Sun’s Peter O’Neil that while Campbell meets the letter of the Senate’s ethics guidelines, his participation has both the appearance of conflict and of an attempt to purchase access.
Back in 2011, Campbell was one of four former Vancouver mayors who wrote to MPs, MLAs and city councillors calling for the legalization of pot. Former premier Mike Harcourt was among them and earlier this year, he was recruited as chairman of another unlicensed company, True Leaf Medicine Inc., based in Lumby, B.C.
(Perhaps Harcourt will be luckier this time than when former NDP MP Nelson Riis duped him, 50 NDP MPs and others out of $4.4 million on a company purporting to export pre-fab concrete homes to developing countries. Riis settled for a two-year market suspension and $40,000 in fines and costs for making “overly optimistic and misleading claims,” as Baines reported in 2009.)
Muileboom Organics doesn’t have a license either. But it does have former prime minister John Turner on its board and Kash Heed, a former B.C. solicitor general and police chief, as a strategic adviser.
Given the all these high-profile appointments, you’d think that there’s no opposition to any of this.
Far from it. Yet, for now, it seems the controversy has been downloaded to municipalities.
It’s in town halls where angry residents are converging when they hear that a legal grow operation could soon be in their backyards, in industrial areas or on prime agricultural land.
And if you think it’s only retired politicians and those at the senior government level who have their eye on a cash windfall, think again.
More about that in another column.
dbramham@vancouversun.com
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