By JW August
Laurie Holcomb, founder of a multiple cannabis companies, has made serious errors in judgment, alleges the U.S.Attorney’s Office in San Diego. The government announced last week it had filed a false claims act complaint against her, claiming that she had illegally obtained five pandemic loans from the federal government.
Her companies were engaged in the “cultivation, distribution, and retail sale of recreational cannabis and cannabis products,” according to the government’s filing. As is commonly known, it’s legal to plant, cultivate and smoke marijuana in California if you play by its rules. Not so with the federal government if it’s sold for recreational use, it’s still considered highly restricted Schedule I drug.
Holcomb’s mistake, the U.S. Attorney alleges, was when she asked the government for money. It was during the pandemic times and she borrowed from the Paycheck Protection Program, or PPP, which was created to help businesses during the pandemic. She convinced the government to give her $1.4 million.
Holcolm’s company claims to have generated $100 million in annual sales of cannabis, according to various media reports. The company also has a 100,000 square-foot cultivation campus in Los Angeles.
The company is described in the media reports as one of the leading legal cannabis companies in the state, having distributed marijuana all over California, including numerous locations in San Diego. Debts and merger decisions forced her to file for bankruptcy protection in March of last year.
According to the government’s complaint, Holcomb obtained loans for Gold Flora LLC; GF Distribution LLC; Gold Flora Partners LLC; and Black Lion Farms LLC— collectively known as the Gold Flora Companies. The Gold Flora website shows stores in San Diego they supply.
Holcomb eventually asked the government to forgive the loan, the government alleges, but it notes that she did this by “falsely certifying under penalty of perjury on loan applications that the businesses were not involved in illegal activity.” The problem, says the government, is marijuana for recreational use is not legal at the federal level.
She later tried to protect her assets by filing for receivership in California Superior Court. The United States’ complaint against Holcomb says she chose the state court in California for protection arguing she “could not file for bankruptcy protection due to the illegality of cannabis under federal law.” Her argument for protection, the federal government alleges, is an admission she knew of the “illegality of cannabis under federal law”.
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The government’s actions were triggered by a whistleblower. The lawsuit was originally brought under the qui tam, or whistleblower, provisions of the False Claims Act. The case was bought by Aidan Forsyth, filed on behalf of the United States. Forsyth may receive a portion of anything the government recovers, if it is successful.
reporter’s note– Why did it take a whistleblower to find this case and report it to the government? I would have thought when she filed for the pandemic money, she would have been stopped right there.
