In California, the state that pioneered the medical cheeba industry, bust followed boom. The state legalized pot in 1996. There were essentially no state regulations on dispensaries, so thousands opened. In 2007, the L.A. City Council sought to limit dispensaries to the 186 that were already in business, but resilient entrepreneurs discovered a loophole. Soon, there were more than 1,000 dispensaries across Los Angeles alone — on almost every block, near schools, everywhere. In 2012, 63 percent of voters supported a measure to limit dispensaries to the stores that had registered before 2007. The City Attorney's Office is now moving to shut down 970 dispensaries.

In San Diego, the City Council voted to keep no more than 36 dispensaries. Some cities, like Oakland and San Francisco, have enacted clear-cut rules that dictate where dispensaries can operate and tack on fees for local government.

In Florida, the Legislature or local municipalities could decide how many businesses will be allowed to open. Some local governments may opt not to allow any medical marijuana commerce at all.

Illustration by Colin Hayes
Illustration by Colin Hayes

And medical marijuana businesses will have to be wary of legal challenges. Michigan approved medical marijuana in 2008, but when two store owners appealed a civil case against their business, the case went to the state supreme court, which ruled that Michigan's 2008 medical marijuana law "does not contemplate patient-to-patient sales of marijuana for medical use." This left an opening for patients and caregivers to grow weed but essentially outlawed dispensaries, and many shut down.

Maggie Volpo, a state marijuana activist, wrote in her blog that she had no choice but to close. She and her husband lost their life savings.

Step 10: Start a penny stock company servicing the medical marijuana industry.

Bah, forget the first nine steps. Building a medical marijuana empire doesn't require so much hard work. Just claim you have a publicly traded business in the marijuana industry and you can reel suckers in with the promise of sizzling stock options. In the past year, Pink Sheets investors have gone bonkers for penny stock companies that have some type of marijuana angle. John Veit, Cannabis Career Institute's vice president, says roughly 60 companies claiming to be in the pot or hemp business offer publicly traded stocks on the over-the-counter bulletin board and Pink Sheets.

"Some are legit," Veit says. "Some are just a couple of dudes in a room who put out a press release on PR Newswire, hoping they get on the news so people get interested in the stock. In terms of volume, I've seen pot stocks make gains of 600 to 3,000 percent," Veit adds.

The problem is, penny stock companies don't have to put up with the pesky federal scrutiny that GM and Facebook go through, like filing audited financial quarterly reports on time or, you know, not lying to potential investors. "You can say you just bought a 1,000-acre hemp field in China," Veit expounds. "You can say you developed a new gizmo that hooks up to a state patient verification system. You don't have to prove it is true to anybody."

Coral Springs-based Cyber Kiosk Solutions Inc. trades under the symbol CYBK. On February 12, Cyber Kiosk sent out a news release announcing that Irwin "Izzy" Zalcberg, a "well-known small cap investor with a large rolodex of connections in the upper echelon of the corporate world," invested $1 million in the company. Zalcberg "took time from his vacation overseas to complete the transaction," the release gushed. A quote attributed to Cyber Kiosk Chief Executive Chris Clarke said, "Mr. Zalcberg obviously recognized the unique opportunity and value that our age/ID verification and fraud prevention software provides for the legalized marijuana industry."

Two weeks later, another news release proclaimed the firm "received commitments from marijuana dispensaries in New Jersey and Colorado with nine total locations to beta test the company's age/id verification and fraud prevention software." Cyber Kiosk included a disclaimer that "CYBK will not release the name of the dispensaries until final testing is complete." How convenient.

The stock's price bounced from 11 cents to 33 cents seven days later, before dropping to 20 cents, then 15. A visit to the company's Coral Springs headquarters revealed an empty office. The company's website is pathetically generic and has no information about software for marijuana dispensaries. According to the company's September 2013 quarterly report, Cyber Kiosk was a limousine company servicing Jacksonville from 1997 until 2012. At the time, the company had a balance of negative $370 in its checking account.

Initially, Cyber Kiosk CEO Clarke did not want to comment. After several attempts, he recently gave a brief telephone interview.

Clarke insists his company is a legitimate technology firm servicing the medical marijuana industry. "We are not a fly-by-night company," he says. "We believed we could expand into that industry and make money. We have a very good business plan."

Despite Cyber Kiosk's prolific news release, Clarke says he isn't looking for ink. "I'm not even interested in you doing an article about us," he concludes. "Maybe in May or June, we can sit down. Send me an email."

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DonkeyHotay topcommenter

Denver Colorado -- The largest federal raids ever of Colorado's medical-marijuana industry culminated Monday in the indictment of four people on accusations they funneled and laundered hundreds of thousands of dollars from Colombia to buy a Denver warehouse.

The allegations in the case, detailed for the first time Monday, paint a picture of international money transfers, a marijuana dispensary owner on the lam, high-dollar cultivation facilities, and a car trunk full of cash. If convicted, the defendants could be sentenced to decades in prison.

"This is a money-laundering case," Jeffrey Dorschner, a spokesman for the U.S. attorney's office in Colorado, said after a court hearing Monday.

Named in the indictment are brothers Luis and Gerardo Uribe, 28 and 33, respectively; attorney David Furtado, 48; and Colombian citizen Hector Diaz, 49. Both Uribes and Furtado were among the owners of the more than a dozen medical-marijuana businesses that Drug Enforcement Administration and Internal Revenue

DonkeyHotay topcommenter

### Colorado Dispensary Operators Indicted by Feds ###

On Nov. 21, federal agents executed search warrants on 14 businesses — including dispensaries and grow facilities — and two homes, carting away plants and seizing records. A search warrant identified 10 men as "target subjects" connected to the operation.

Denver attorney Sean McAllister said Friday his client, Gerardo Uribe, was indicted.