As reported in this Law360 piece, “Illegality Nixes Most of Marijuana Investment Scheme Suit,” a Colorado judge dismissed an investor’s fraud claim against the principal behind an investment vehicle whose strategy revolved around the Colorado cannabis industry. The court found that the relief sought would violate the Controlled Substances Act, underscoring the perils of investing in a space that remains federally illegal. While courts generally understand themselves to be capable of granting relief so long as such relief does not require the production or distribution of marijuana, as the article reports, the lines defining that distinction are not nearly as clearly drawn as such a test may suggest.
This decision yet again demonstrates how federal illegality is a key aspect of cannabis valuation and litigation, and must be considered at each stage.