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 ‘KYC Gold Record’ with RegTech OneTM platform for comprehensive AML/KYC
AML Partners designed its flagship software platform RegTech OneTM as a No-Code horizontal Governance-Risk-Compliance platform with dynamic workflows designed for comprehensive AML/CTF and countering fraud. RegTech One provides the single software platform for end-to-end AML/CTF, Case Management, vendor management, and any other RegTech or Business Process Management. AML Partners’ RegTech OneTM platform gives Auditors, Risk Managers, and Compliance professionals a Network of Applications and an Ecosystem of Permissioned Data to self-serve their internal controls on all systems. AML Partners’ innovations include providing one-time global onboarding; KYC Gold Record is now a configuration option within RegTech One’s No-Code development environment. Platform users now onboard customers one time in one country and reuse that onboarded data locally, adding or removing local jurisdictional requirements. Onboard once; use globally as often as desired. To learn more about RegTech One and to schedule a demonstration, contact us today.