FBI Investigates Corruption in the Cannabis Industry
The legalization of medicinal and recreational cannabis use throughout the United States has led to an estimated rise in political corruption. As a recently established industry that is achieving overwhelming success, the marijuana business is bringing in serious cash flow. Now, only two small years after California approved the use of recreational marijuana, the industry is already under investigation for corruption by the FBI.
Some welcome this probe on public corruption while others loathe the idea and actions taken by the FBI. It is the belief, that some licenses are being reserved by political bureaucrats, while being handed to the highest bidders. This is just one complaint and allegation among many in a growing industry that will reap hundreds of billions in marijuana sales over the next 10 years.
The cannabis industry has been proving itself as a money spinner since the first states opted for legalization. During 2017 alone the marijuana industry contributed between $20bn and $23bn towards the US economy. It is estimated that this figure will rise to more than $77bn before 2022. Figures like this contribute to the likelihood of corruption. Additionally, the cannabis business is mostly cash-only, leaving scope for large figures to pass hand-to-hand without records being kept.
It is the success of this newly grown US industry that is making it a potential target for corruption. The large amounts of cash involved, alongside the strict licensing of marijuana products has left officials open to bribery. Some sources attribute the availability of cash to the fact that cannabis is still illegal at a federal level. This makes it impossible for banks to accept their business and results in an industry that mostly pays upfront.
Sheriff Jon Lopey, of Sacramento, is an officer of the law who has helped highlight the issue. Lopey reports that he was approached by a stranger and offered $1 million if he would turn a blind eye to some illegal cannabis farms operating within his jurisdiction. Lopey went on to report this information to the FBI. According to the authorities, similar types of incidents have been reported across many states where marijuana is legal.
In early August of 2019, the FBI officially announced that it was investigating possible corruption in the US cannabis industry. In a recent podcast, Mollie Halpern, an FBI Public Affairs Specialist, said that there is more corruption in central states where licensing is not centralized. Being decentralized allows corruption to be found among public officials in the lowest level positions, to the highest. She later went on to add that the problem is expected to continue as more states embrace legalization.
The FBI has asked for public assistance with their inquiries. The public is urged to report any suspicious activity regarding dispensaries, or any suspected corruption in the marijuana industry, directly to the bureau. Supervisory Special Agent Regino Chavez, who was also present during the podcast, admitted knowledge of previous corruption in the industry. According to Chavez, a cannabis business license can be sold for as much as half a million dollars.
Many argue that the assertive regulation of cannabis businesses on a federal level, rather than the decentralized model in operation now, will help eradicate corruption. It is believed that fitting many cannabis businesses into existing business models may help. For example; a business with a bank account and proper invoicing system is less likely to have large amounts of cash on hand to use for bribery. Those who are concerned about particular businesses are able to report them directly to the FBI. Cannabis producers have expressed fears over this appeal, worrying that competitors might report businesses for no reason.
It seems like greater regulation on a federal level might be the best solution to the cannabis corruption crisis. Until then, the problem is estimated to get worse as legalization spreads. There have been some studies on how an effective framework could be established to accomplish this. However, until then, the overall impact this corruption will have on the future of this emerging industry remains to be seen.