While Washington Initiative 502 establishes a licensing system for marijuana producers, processors, and retailers, Section 69.50.101 of the Revised Code of Washington makes clear that cannabis is still classified as a Schedule I drug under the U.S. Controlled Substances Act (“CSA”). Any involvement with the Company is subject to federal prosecution. If the Company is successful in implementing our Business Plan, we will sell many thousands of keys (kilograms) of marijuana in the first few years following this Offering. First-time, non-violent offenders convicted of trafficking in Schedule I drugs can be sentenced to life in prison when multiple sales are prosecuted in one proceeding (please see Sections 841 of the CSA). Your participation as an investor could be deemed to constitute trafficking under well-established principles of criminal law. Furthermore, your entire investment, and any profits derived from your investment, is and are subject to forfeiture “to the United States, irrespective of any provision of State law” (Section 853 of the CSA). In addition, each of the founders and directors of this Company could be sentenced to life in prison under Section 848 of the CSA for serving as “the principal administrator, organizer, or leader” of a “continuing criminal enterprise.” Incarceration of the management team of the Company, and the forfeiture of the Company’s property, could have material adverse (indeed catastrophic) consequences for the Company. In addition to the inability of the Company to use banks and banking services, rent facilities or deduct its legitimate business expenses for federal tax purposes, all of which are discussed elsewhere in the Offering Documents, the protective benefits of federal bankruptcy might not be available if the Company were found to be a continuing criminal enterprise. You are strongly urged to consult with your own attorney about the illegality of participating in this Offering. The Securities Counsel for the Company, who drafted this Risk Factor and the other Offering Documents, might be subject to federal prosecution. He is not available to respond to your inquiries.
John A. Myer is a corporate and securities lawyer with Myer Law PLLC in Seattle, Washington. This posting is a somewhat whimsical version of a risk factor that should (but might not) be found in the offering documents prepared in connection with a private placement of securities to potential investors in the Company. The Company’s business plan involves distributing marijuana in Washington State. The Company is a purely fictitious. This posting does not constitute legal advice.