A trio of marijuana-related lawsuits filed by Florida-based legal powerhouse Perlman, Bajandas, Yevoli & Albright, expose the potential dangers lurking in the emerging market for medical and therapeutic marijuana products. The lawsuits, filed against a prominent California marijuana company, allege a scheme to defraud $1.2 million in still-unrepaid loans, and serve as a wake up call for marijuana investors, particularly in a rapidly evolving legalization market like Florida.

In the lawsuits, lenders allege that a “California-based marijuana company and a key executive used ‘make-believe projections’ – inflated by 2,000% – to intentionally deceive them about the company’s true financial picture and then pocketed the money with no intention of ever repaying the debt.”

Court documents paint an alarming picture, alleging that cannabis entrepreneur Case Mandel and the businesses he operated under the name Cannadips, conned business partners out of well over $1.2 million through various transactions. Mandel is alleged to have made a series of blatantly false representations, including the use of make-believe projections, to lure business partners and affiliates into deals Mandel never intended to fulfill.

Mandel became the darling of the legal marijuana industry when he introduced Cannadips, or “weed dip,” as a product that could help end addictions to chewing tobacco. But while marijuana trade publications have romanticized him and turned him into a pseudo-celebrity, allegations of masterminding a deceptive scheme to illegally entice loans and investments with intentionally misleading documents and tactics cast him in a decidedly less favorable light.

The case holds significant lessons for Florida investors, who are eyeing the Sunshine State as the next frontier in marijuana legalization after a wave of smaller states have adopted more lax enforcement laws relating to the use and possession of marijuana-based products.

Florida’s first Director of the Office of Medical Marijuana Use, Christian Bax, who is now an industry expert and consultant, warned investors to beware of shady operators in the evolving legal marijuana industry. 

“The hemp and CBD markets are booming right now, but they are still fairly new. Despite the progress we’ve seen, the industry is still being undercut by spurious businesspeople looking to take advantage of investors looking to invest in cannabis,” said Bax, president of Bax and Associates. “There are so many entrepreneurs doing the right thing in hemp and CBD, but, unfortunately, investors these days have to be vigilant against misrepresentation, or worse, outright fraud.” 

In the case against Mandel and Cannadips, the state court lawsuits say Mandel was “on a desperate pursuit to raise money at all costs.” After borrowing half a million dollars in 2018, he increased his debt to $1 million the following year. Then, claiming he needed more money for marketing so he could generate enough cash flow to pay back the loans, Mandel borrowed another $200,000. Court documents allege he has not paid back any of the borrowed funds.