As states like California and Oregon pass new cannabis legislation and the industry grows exponentially, the banking industry has yet to catch up and welcome this new green economy. Many leading national banks and payment service providers, including Visa and Mastercard, will not accept transactions from marijuana-related businesses.
Such was the case that cannabis businessmen, Hamid “Ray” Akhavan and Ruben Weigand, were found guilty in March 2021 by a federal court for conspiracy to commit bank fraud in an effort to hide their marijuana-linked transactions. According to the Wall Street Journal the two men were convicted for trying to “trick U.S. banks into processing around $160 million in marijuana-related purchases”.
Court documents and witness testimonies showed that Akhavan and Ruben had set up shell companies and filed false applications with U.S. and European banks while working as consultants for Eaze Technologies, a cannabis marketplace and delivery app in California, to try to get the app to accept credit card payments.
The sophisticated conspiracy involved a brow-raising 140 co-conspirators, from former credit card executives to James Patterson, the former CEO of Eaze. Patterson, who was also embroiled in the scandal, pleaded guilty to one count of bank fraud conspiracy before the trial went to court and testified against Akhavan.
“In addition to a prison term, Akhavan…was sentenced to three years of supervised release, and ordered to pay a fine of $100,000 and forfeiture in the amount of $17,183,114.57. Weigand…was also sentenced to three years of supervised release, and ordered to pay a fine of $50,000 and forfeiture in the amount of $384,000,” states a Department of Justice press release.
While the sale of cannabis products in certain states has been legalized, federal laws continue to inhibit many transactions for this industry. It is advised to consult with a lawyer to ensure your cannabis business is complying with both state and federal laws. Connect with the team at Padula Law to set up a consultation.
