State Warns Investors Who Might Finance Pot-Related Businesses To Beware Of Scams

Pot is not legal for medical or recreational use in Wisconsin, but the state is warning people who might potentially invest in marijuana-related businesses not to be taken in by investment scammers.

In this month’s elections voters in Alaska, Oregon, and Washington, D.C. approved the use of recreational marijuana, and 23 states also allow medicinal pot usage. The trend has caused Wisconsin’s Department of Financial Institutions to issue an alert to potential investors to do their homework.

Patty Struck is the administrator for the department’s Division of Securities. She said there are many marijuana-related businesses springing up across the country that market vaporizers, hydroponic equipment, lighting systems, or security systems.

“Many of the companies are thinly capitalized and are re-selling low-priced securities that are highly speculative,” she said.

Struck said her department hasn’t received any complaints from Wisconsin investors. Even though marijuana is not legal in Wisconsin, she said securities law gives exemptions to investors and they’re allowed to take a stake in a legal pot company.