OBN: Ghost Owners May be Tied to Quarter of Oklahoma Medical Marijuana Business
News 9 - October 21, 2022 6:45 am
OKLAHOMA CITY –
Three Oklahoma attorneys are accused of enlisting state residents to pose as “ghost owners” of medical marijuana businesses from out-of-state. The practice, according to state drug investigators, has galvanized black-market drug production in Oklahoma.
The Oklahoma Bureau of Narcotics has accused Eric Brown and Logan Jones of the Oklahoma City-based Jones Brown firm, and Matt Stacy of Stacy Legal Group in Yukon of orchestrating so-called “ghost owners” license deals.
“We believe this ‘ghost’ ownership fraudulent structure and documentation is the number one reason Oklahoma now leads the nation in black market marijuana,” said Mark Woodward of OBN.
Oklahoma marijuana businesses are required to be 75% owned by in-state residents to be licensed. The OBN is investigating “well over a thousand, if not close to two thousand” marijuana growers that may have obtained licenses despite the in-state owner having no actual role with the company.
There are 7,400 licensed growers in the state, according to the Oklahoma Medical Marijuana Authority.
“Almost 25% of the farms that are operating in Oklahoma are potentially operating under the same fraudulent business scheme,” Woodward said.
A Multicounty Grand Jury indicted Stacy on 12 felony counts including aggravated manufacturing of a controlled substance and filing false information with OBN.
Stacy’s attorney, Joe White, did not return News 9’s request for comment Thursday. White told the Oklahoman that Stacy denies wrongdoing and has been in regular contact with the OBN.
The state Attorney General’s office charged Brown and Jones with 11 felony counts each including conspiracy to cultivate marijuana and falsifying documents with OBN. Attorneys for both deny any criminal wrongdoing.
Charges against all three suspects were filed in Garvin County District court.
The attorneys are accused of hiring Oklahoma residents to pose as owners of out-of-state marijuana companies moving to the state.
The residents, according to an affidavit prepared by an OBN agent, “only appear on paper and have no actual ownership interest, control, or direct benefit from the grow operation outside of an initial lump sum or monthly payment to stay on the license and registration as an owner.”
Jones told OBN agents the resident “is not going to participate in the decision making, establishment of the business, cultivation, dispensing, or processing,” according to the affidavit.
The three attorneys allegedly enlisted a handful of Oklahoma residents, among whom were employees of the law firms or other acquaintances, to pose as owners on hundreds of marijuana-growing license applications.
The firms paid each resident as much as $5,000 per license.
One former Jones Brown employee was listed as an owner of more than 250 growing businesses before she removed herself from the licenses. Prosecutors say the employee is not cooperating with their investigation.
Kenneth Adair, Brown’s attorney in the criminal case, said Brown “is looking forward to his day in court” and claimed the practice was legal.
The OBN doesn’t “like the fact that people can contract in that way. (The in-state owners) don’t have zero stake in the company. That’s an absolute falsehood.”
Stanley Monroe, attorney for Jones, said “Mr. Jones was assured by the authorities that the manner he interpreted the residency requirements was appropriate.”
Woodward said OBN is “scratching at the surface” of the fullest extent of the use of “ghost owners,” which he said spans beyond the law firms that have been investigated so far.
An OMMA spokesperson said the agency is working with the OBN and other agencies “to identify bad actors and stop illegal activity like ghost ownership.”