Fraud and The Cannabis Industry: An Endemic Problem That Needs to Be Addressed

Germany is moving toward full legalization of the industry and many countries in Europe are establishing themselves in either the medical or recreational space – but massive problems with fraud haunt the nascent industry already – and will have to be addressed sooner rather than later

There is much to celebrate about cannabis reform. The plant is a wonder that can change lives. Tragically, however, the industry is rampant with fraud – and of all kinds – even in Europe and Germany.

How that is addressed, particularly in the aftermath of the Juicy Fields scandal, is another question that will take concerted efforts to eliminate if not stamp out – and further by the legal, legit industry.

Europe’s Largest Cannabis Fraud Case to Date

The balls have not stopped dropping on the Juicy Fields case. So far, over the last month:

  1. In Spain, the top criminal court has just opened a fraud investigation into the “investment platform.”
  2. In Munich, public prosecutors are investigating whether there was a Ponzi scheme behind the fund
  3. The General Prosecutor’s Office in Berlin has published a press release dated August 17 that people responsible for the platform “” had their homes and businesses searched. In addition, assets of four companies each amounting to 2,557,197 euros were confiscated, along with numerous documents.

This, however, is far from the end of the investigations (across Europe if not globally). The reality is that the company spread money far and wide, and many who took such payments and knew there were problems with the company and its claims will also be caught up in a much wider investigatory net.

This is far, far from over.

Who Knew What, When?

Beyond recovering investors’ assets, there is also the question of who helped promote Juicy Fields to unsuspecting investors. It is not like there were not a lot of people who knew, even if not the gory details, that not all was kosher. Many of these individuals and companies were in the cannabis conference industry, which Juicy Fields targeted assiduously.

Accepting this kind of money from a sponsor, particularly to entice new investors, is also a kind of fraud. Who knew what (and when), and who accepted money (and when) is another discussion that will absolutely become a part of the discussion.

Tragically, this also means that particularly smaller and growing conferences will be facing an investigation into the acceptance of such funds – which, given the charges about Juicy Fields could include deliberately accepted laundered money if not stolen assets. It is likely that in Europe, this will shake up the entire conference business, since the acceptance of such sponsor money was widespread, even with doubts about the legitimacy of Juicy Fields’ claims. This includes conferences in (at least) Berlin and Frankfurt so far plus Spain. It also involves undermining if not threatening journalists and whistle-blowers (which is endemic.)

Beyond that, lawyers connected to the industry certainly knew that Juicy Fields was a scam, even if they did not speak out directly. These individuals will also face some scrutiny, even if “protecting” their clients or participating in conferences where Juicy Fields was a sponsor.

How such investigations trickle through the legal system will not be a fast process, but the entire investigation is unlikely to end with simply the company itself.

Bottom line? There were many people who knew that the company was problematic – and still did nothing.

Saying something, however, took an act of courage – and still does.

People are now fast in claiming that they did not “know.” However, those who are the loudest in their denials are usually individuals who did know but did nothing to stop taking money, even when warned.

Legalization Requires a Commitment to Stop Fraud

There are a few companies in Germany, Sanity Group being one of them, who took public stands against this situation, in particular.

They are to be commended because the stance was far from popular.

However, vigilance going forward, and far beyond the particulars of this case, will require the active involvement of any company operating in this industry, particularly as the recreational industry begins to set itself up for business. Not to mention industry groups.

Many Kinds of Fraud

There are multiple kinds of fraud that will face both individuals and companies as legalization progresses. This includes not only sources of financing, but shoddy products, corrupt supply chains, overpaying for legitimate products and assets (which can be a form of money laundering too), and looking the other way when inconvenient (if not dangerous) to say anything, particularly when accepting money in the process.

Many of these kinds of problems have shown up in North American markets (in particular).

It also includes not paying people (either employees or freelancers), deliberately underpaying the same, or refusing to sign contracts while putting pressure on people if not direct intimidation to begin or continue performing tasks without a formal contract in place – or continue performing tasks while hoping to get paid.

It also includes deliberate attempts to defraud individuals for another’s gain – which is also rampant right now in places like Berlin.

Beyond this, deliberately overstating assets, company valuation, income, or any other deliberate misstatement of fact about financing, or what is to be financed, is also a form of fraud – and further one that is rampant in the legalizing industry everywhere.

An Honest Industry: A Work in Progress

There are many challenges to operating legitimately in the cannabis industry, but the first step is a commitment to honesty, transparency, and ethical business behavior.

This is the only way the industry will begin to gain real traction – and further as a legitimate vertical.

Mistakes happen – and in this industry all the time. However, once one is aware of a problem, ignoring it will not make it just go away.

The legitimate companies in Europe right now have a vested interest in joining together to stop egregious violations – of financial regulations, public safety mandates, and other issues – wherever they occur.

Until this happens, legalization is merely the first step.

An industry that can be trusted is currently a work in progress.


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