SALT LAKE CITY -- Don’t get burned by the latest investment scam; The Utah Division of Securities is warning investors to be on the lookout for medical marijuana businesses that are offering hot stocks.
It’s still classified as an illegal drug, but medical marijuana use is permitted in 20 states and recreational use is legal in Washington and Colorado.
On Friday, officials at The White House announced that federal banking institutions will accept payment from medical marijuana businesses, causing The Utah Department of Commerce to issue a warning to investors.
“It’s true throughout history that fraudsters tend to follow the news, and when there’s a topic of conversation that a lot of people are paying attention to the fraudsters are going to glob on to that,” said Keith Woodwell, who is the Division of Securities director.
The Division of Securities is cautioning people to be on the lookout for marijuana stock scams disguised as money making opportunities.
“They put up a site on the Internet, say, ‘Hey we’re going to go into the marijuana business and we’re looking for investors.’ Those are the ones I’m most worried about,” Woodwell said.
Misleading promotions about medical marijuana stocks are being pushed via emails, Facebook, infomercials, seminars, Twitter and blog posts.
“We’re just trying to make people aware that, even though there is a lot of attention being paid to the medical marijuana business right now, it really is probably not a great choice for your investment dollars,” Woodwell said. “The promises that some of them are making are ridiculous.”
Guarantees of doubling your money or being invited to get in on the ground floor are signs of scams.
Before you buy stock, Woodwell said to stop and ask yourself: “Why me? Why are they offering this opportunity to a complete stranger over the Internet if it really is such a great opportunity with wonderful returns?”
Other steps you can take to make sure you don’t fall victimized are:
- Consider the source
- Do your research
- Know where the stock trades
- Be wary of frequent changes to a company’s name or business focus.
“Frankly I’m not all that surprised that we’ve seen these type of offers every time there’s a new opportunity for con men to either capitalize on either fears or new interest of the public they’re going to do it,” Woodwell said.
Don’t let the promise of high returns burn up your savings.