The end of the CannaBro culture?

A recently filed court filing revealed that Ignite International Brands Ltd., a Canadian cannabis company run by Dan Bilzerian, a US social media influencer, is under investigation by the US Securities and Exchange Commission (SEC). The company faces civil and criminal fraud investigations in the United States and a regulatory investigation in Canada.

Ignite International Brands Ltd. headquartered in Markham, Ontario, was active in the Canadian cannabis market until October of last year. The company was led by CEO Dan Bilzerian, a Los Angeles-based Armenian-American social media influencer and poker player with more than 33 million Instagram followers. Known for its cannab bro culture and heavy reliance on bikini-clad women, many found its message offensive and outdated.

The company is now focused on consumer products such as vape and CBD products, apparel, performance drinks, and spirits including vodka, seltzer, and tequila. Until the company went private on August 29, 2022, it was publicly traded on the Canadian Securities Exchange under the symbol BILZ-CN.

Peaking in 2019, Ignite International Brands Ltd had a market capitalization of over $750 million. However, immediately after the company ceased public trading in the United States and Canada, the value dropped to about $170 million.

The US Securities and Exchange Commission (SEC) v. Ignite International Brands Ltd.

On August 29, 2022, the US Securities and Exchange Commission (SEC) filed a motion in a California court to order Ignite International Brands Ltd to cooperate with a subpoena issued to the company in May 2022. The court filing revealed that Ignite International Brands Ltd is facing multiple arrest warrants in the United States criminal justice system. Likewise, court documents in Canada showed that the company is facing a number of requests from regulators.

Patricia Pei, an associate with the SEC, said in the court filing that after receiving information about possible anti-fraud violations by Ignite International Brands Ltd. seek.

She further said that the SEC uncovered information indicating that Ignite filed financial statements that included misleading or incorrect data in its 2020 earnings.

According to a statement released on the SEC’s website, the agency reiterated that it will continue its investigation as no evidence has surfaced that a company or individual violated securities laws. The Ontario Securities Commission (OSC), the agency that forced Ignite to show the disclosures in its financial statements earlier this year, had no comment on the matter.

Based on the details in the US court documents, there has been a back-and-forth between Ignite and the SEC since a subpoena was issued on May 20, 2022. Paul Holden, Ignite’s general counsel, confirmed in an August news report that the company has been in constant communication with the SEC. He said the firm provided the agency with thousands of documents in response to the subpoena issued in 2021. When asked for comment after the final warrant was issued, Mr Hughes did not respond.

Mr. Hughes replaced Paul Holden as General Counsel of Ignite, but not before Paul Holden issued a statement that he was leaving the firm for personal reasons. He then asked the SEC to give Ignite more time to comply with the request.

Mr. Hughes has quickly settled into his new position. On August 1, 2022, he sent an email attached to the court filing requesting that the SEC’s subpoena be stayed. Mr. Hughes argued that the Justice Department’s subpoena matters likely have significant overlap with those of the SEC.

He went on to say that it was nothing but unreasonable to ask the firm to handle the civil litigation issues while also handling grand jury subpoenas. Mr. Hughes confirmed that the Company is aware of other grand jury subpoenas.

On August 22, 2022, Mr. Hughes sent a follow-up letter acknowledging the Canadian regulator’s requests. However, the letter did not specify which regulators were investigating. In the letter, Mr. Hughes confirmed that the purpose of the subpoenas issued by the Department of Justice for the company remains unclear.

Mr. Hughes explained that Paul Holden’s sudden departure from the firm and his efforts to stay abreast of the issues delayed the entire process. Therefore, it gave the impression that the company was trying to avoid the entire SEC investigation, which Mr. Hughes confirmed was not the case. However, the SEC denied the company’s filing, saying the original deadline was June 15, 2022.

An extravagant lifestyle

Ignite International Brands Ltd CEO Dan Bilzerian has built the company’s identity and brand around its extravagant lifestyle. In May 2022, a Bloomberg News report claimed Mr Bilzerian threw a huge party at his Los Angeles mansion. The report claimed it hosted about 2,700 guests, including pop artists like The Weeknd, Chance the Rapper and Blink-182 drummers. The party included fire-breathing bartenders, a tattoo parlor, a lingerie contest and neon-lit skydivers who jumped from a helicopter to the driveway. The party is said to be the launch of a premium vodka that contains alkaline water.

In October 2021, Ignite International Brands Ltd announced to the public that the company was exiting the Canadian cannabis market due to many obstacles such as: B. the strict regulations of the government. In May, the company announced that after its disclosures were reviewed by the OSC, it would file an annual report that includes a contractual agreement between another company owned by Mr. Bilzerian and Ignite.

The company added several points to its management analysis and discussions while correcting deficiencies in previous period reports reviewed by the OSC. Ignite accomplished this by adding more information about profit standards that were initially ignored and that must be calculated using generally accepted accounting principles.

Conclusion

As the SEC and Ignite continue to go back and forth in fraudulent accounting issues, Bilzerian continues to live his extravagant lifestyle and flood his social media page with his social outings. The CEO is said to host lavish parties at his Bel-Air mansion, which features a 12-foot waterfall, bowling alley, movie theater, nine-car garage, seven bars and a walk-in bong cabinet.

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