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Marijuana Business Scammers Posing as State Inspectors, Utility Providers

The Denver Police Department warned of attempted fraud at marijuana businesses last October, and those attempts have continued into 2021.EXPAND
The Denver Police Department warned of attempted fraud at marijuana businesses last October, and those attempts have continued into 2021.
Scott Lentz
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Scammers are going after marijuana businesses in Colorado, posing as an array of authority figures and colleagues while targeting employees in an effort to steal cash.

Stephanie Hull, director of operations for Rocky Road Remedies, says that con artists have contacted employees at two stores numerous times, presenting themselves as higher management, product vendors, utility providers and even state Marijuana Enforcement Division inspectors, all in an effort to persuade store staffers to drop off or wire thousands of dollars in cash. Rocky Road has been experiencing regular scam attempts since November, she notes, and it's not alone.

The Denver Police Department sent an alert to local marijuana business owners last October, warning of texting scams aimed at the industry. The fraudsters didn't go away, though, and the MED issued its own statewide memo about a month later. On January 14, the MED sent out the same memo, but with a new message in bold at the top: "Since this bulletin was published, incidents of fraud have escalated, thus increasing the need to alert all licensed employees of the necessity to be vigilant of all fraudulent attempts."

According to Hull, the incidents at Rocky Road dispensaries started out with someone calling the store and posing as a product vendor. The fake vendor would then ask the dispensary employee, usually the store manager, for a cell-phone number to continue the conversation at another time — only instead of contacting the employee as a vendor, the scammer would then reach out pretending to be higher business management, a state inspector or utility provider.

"They would ask for another cell number because they don't want to tie up a store phone. Once they have the cell-phone number, they change the story," Hull explains. "Then they contact the manager via text and present themselves as a director of operations, general manager or someone else."

In one instance, a scammer posed as the business director — that's Hull's position — claiming to be in the hospital and in need of $10,000 to pay for an upcoming state inspection. In another, employees were sent text messages by someone posing as a state MED inspector, who demanded money for a business-license renewal and threatened to revoke the store's license if it went unpaid. Rocky Road was able to thwart the attempts when the targeted employees eventually called their real supervisors with follow-up questions about pulling out cash or where to drop it off.

"They're pretty tricky," Hull says. "They try to catch employees when we're busy and trying to manage the store, and then make it an emergency situation."

More recently, a scammer contacted a Rocky Road employee posing as an Xcel Energy representative, and said a monthly bill payment was due by 2 p.m. that day or the power would be shut off. Rocky Road's accountant then contacted the number provided, which carried an Xcel Energy caller ID as well as a voice message that sounded strikingly similar to a real Xcel message, according to Hull. The message directed that the payment be made at a bill-payment kiosk, and a Rocky Road employee actually took cash there to deposit a payment. Luckily, the kiosk displayed a warning message, saying that anyone directed to pay an Xcel bill there was being scammed.

The Xcel scam is relatively common in the world of fraud, but the marijuana industry, reliant on electricity to run indoor growing operations and largely operating in cash because of the plant's federal prohibition, could be an easier target than others. As Hull points out, many dispensary vendors can't accept checks and must be paid in cash, because they often lack bank accounts.

"I think they play on a fear of being shut down in this industry, having your power shut off or not being to operate because you lost a MED license," Hull says. "In some cases they had my name, they had my general manager's name."

The scams go even deeper into details. Rita Tsalyuk, co-owner of five dispensaries in the metro area, says that two of her stores have been the targets of attempted fraud, with scammers using a fake caller ID that bears a picture of Tsalyuk to contact employees.

A fake MED inspector contacted one of Tsalyuk's store managers with instructions to take pictures of the business, including photos of fire extinguishers and the dispensary's safe. The employee was able to contact Tsalyuk before wiring any money to the fake MED inspector, but the scammers didn't stop there, contacting another one of Tsalyuk's stores pretending to be an electricity provider.

Both incidents were extremely similar to the Rocky Road incidents, and Tsalyuk notes that her dispensaries' supplying grow operations have been subject to electricity-payment scams since 2016. "I think the electricity scams happen to everyone, but marijuana businesses more than others, I believe," Tsalyuk says. "Cultivation facilities can't lose power. The flower will die, so I think they get targeted, specifically."

Both Tsalyuk and Hull have alerted their employees to the rise in fraud throughout the marijuana industry, and have updated some of their business practices to further vet people contacting their businesses.

The DPD and MED are still investigating the cases and believe them to be connected. According to the MED, scammers are also pretending to be police officers investigating counterfeit currency, as well as wholesale suppliers who want to inspect the premises.

According to the MED, marijuana businesses can verify an MED inspector's status as a state employee by using a search tool with the Colorado Department of Personnel and Administration or by contacting the MED directly.

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