Municipal corruption in the spotlight in grand-jury probe of Massachusetts’ recreational cannabis industry
The problem of the marijuana industry and access to banking is well known. Because financial institutions have such high-stakes requirements in AML Compliance, they remain very wary of customers with ties to the state-legal cannabis industry. But in Massachusetts, corruption in municipal governments has led to new worries about criminality that arises with legal marijuana.
The Boston Globe this week broke a story about the convening of a federal grand jury by U.S. Attorney Andrew Lelling. Investigators are examining contracts and payments between Massachusetts towns and the cannabis businesses to whom they issue contracts.
The cannabis businesses may not apply for a state license to sell cannabis until they have a municipal contract in hand. This gives communities tremendous leverage to require large payments, called impact fees, that often far exceed what the state allows. The federal investigation seeks to learn whether certain municipalities and individuals who lead them are profiting illegally from this extraordinary leverage over applicants.
A Globe reporter saw a copy of one of the subpoenas issued to a municipality. The subpoena requires submission of “copies of host community agreements, including unsigned early drafts; all communications between marijuana companies and local officials, plus e-mails and other communications among officials regarding the agreements; records indicating community support or opposition to proposals for local marijuana facilities; records regarding current and former municipal employees or officials attempting to win local marijuana permits or working for marijuana firms; and records about public meetings or votes on applications by marijuana firms for local approval.”
Earlier this fall, the U.S. attorney’s office charged Jasiel Correia II, the mayor of Fall River, MA, with pressuring four cannabis businesses to pay over half a million dollars in bribes to secure licenses for operation in Fall River. Correia has pleaded innocent to all charges.
Fall River is one of many communities where the decision to issue a contract was left to a single person —a situation that gives extraordinary power over applicants to that single person.
Massachusetts has wrestled with the details of rolling out legalized recreational marijuana. Officials at the state and local levels have sparred over which level should have control. Municipalities have argued for control of marijuana businesses in their towns and cities. But the issue of corruption has given new leverage to advocates calling for more balanced oversight of the big-money industry.
Leverage ‘eKYC Gold Record’ with RegTechONE platform for comprehensive AML/KYC
With AML Partners’ platform technology for RegTech, updating and upgrading your AML and eGRC software solutions is easier, faster, and much less expensive. Contact us today to explore how platform technology and our end-to-end AML Ecosystem powered by the RegTechONE platform–can transform the efficiency and effectiveness of your unique AML Compliance efforts. RegTechONE software for AML Compliance includes fully integrated modules for CDD KYC software for on-boarding, behavior and transaction monitoring software, and sanctions screening software for comprehensive AML screening. And AML Partners simplifies your end-to-end fully integrated AML Compliance efforts even further with an optional Subpoena Search module for FinCEN 314a and similar subpoena searches. Contact us today to learn about our proof-of-concept option or schedule a demo of RegTechONE, the AML software ecosystem. With extraordinary configurability and built for API extensibility, the RegTechONE AML software platformpowers not only an end-to-end AML software solution but also vendor management, AML client lifecycle management, eKYC Golden Records, Perpetual KYC, and so much more.
