In a May 16, 2014 investor alert, the SEC cautioned investors about potential risks involving investments in marijuana- related companies.

The SEC noted an increase in fraudsters seeking to exploit the latest growth industry – in this case, marijuana – to lure investors with the promise of high returns. The SEC reminded investors that while some states have legalized the operations of certain marijuana-related companies, federal law still makes it illegal to manufacture, distribute or dispense marijuana. The SEC reported that it suspended trading in several marijuana-related companies because of questions regarding the accuracy of publicly available information about these companies’ operations.