If you purchase cannabis illegally on the black market and live in a state near Oregon, you could still be buying marijuana from Oregon dispensaries. The feds are none too happy with Oregon, as an overwhelming surplus of cannabis product has instigated cannabis diversion across state lines. An Oregon State Police report targeted the state as one of the leading exporters in the black market for premium cannabis while an audit targeted the Oregon Liquor Control Commission as lacking “robust” monitoring and enforcement policies to regulate the $480 million market.
The problem’s become so bad that Billy Williams, the U.S. Attorney for Oregon, revealed in a memo that the feds will target the illicit black market and any outlaw grows and operations that “pose a substantial risk of violence.” In response to the oversupply and reports, Oregon marijuana regulators have hit pause on issuing any new licenses since June 15.
This is all prelude to federal authorities arresting the Corvallis Cannabis Club owners for running “bust-out” credit card fraud schemes and interstate cannabis diversion operations, reports the Corvallis Gazette-Times. The owners, Mariam Gevorkova and Yeghishe Nazaryan, used the credit fraud to fund their illegal marijuana grows and diversion.
Never heard of a “bust-out” credit card scheme? It involves running up large credit card balances and paying them off using a co-conspirator’s bank account. Then the co-conspirator would contact their bank to challenge the charge and receiving a full refund before any financial institution could detect something was wrong. Prosecutors have accused the defendants of defrauding financial institutions of more than $1 million.
Here’s where it gets crazier. Authorities weren’t even investigating the Corvallis Club owners for diversion, but a man waving a gun around and demanding money tipped them off.
The complaint states a man told Corvallis police in June 2017 that several Corvallis residents were involved in large-scale fraud. The man, identified only as O.J. in the complaint, said he had agreed to be a part of the scheme and was promised money but was never paid. The man told this to police after officers responded June 6, 2017, to a home on Southwest Philomath Boulevard for a report of O.J. threatening people with a gun and demanding payment, according to the complaint. O.J. told Corvallis police officers that he wanted to talk to the FBI about the fraud, the complaint states. O.J. is not facing charges in the case.
Authorities were then able to make a connection to the Corvallis Club operation and a convenience store in Peoria, Illinois selling black market cannabis. This comes eight months after Richard Hawkins, the owner of a popular Oregon marijuana-extraction company, was arrested in Nebraska with a $1.1 million worth of marijuana products. Not a good luck for the industry.
In addition to halting issuing licenses, the OLCC also announced plans earlier this year to have spot inspections with cannabis businesses. As another effort to curtail the black market, the OLCC will ask outdoor growers to inform them of each of their harvests ahead of time.