Marijuana firm Bright Green’s immigrant fundraising plan draws scrutiny


Nasdaq-traded marijuana company Bright Green Corp. is again attracting scrutiny and questions, this time for its audacious plan to raise $500 million through a federal investment program that targets immigrant investors.

The company announced in a February news release it would use the money generated through the EB-5 Immigrant Investor Program to build out its “world-class production and drug manufacturing facilities” in the small New Mexico town of Grants.

Florida-based Bright Green also plans to use the money to bankroll research and development as well as federal clinical trials for drug development.

Bright Green’s CEO calls the strategy “quite a novel way” to raise money at a time when cannabis industry funding is tight.

However, experts familiar with the EB-5 Immigrant Investor Program are raising questions about the company’s use of the investment vehicle.

The program allows international investors to qualify for a U.S. green card, or permanent residency, if key conditions are met.

Experts note that:

  • The EB-5 program is used most often to supplement capital raises – versus serving as the main source of funding.
  • The program is typically used to bankroll real estate projects such as hotels in areas with high unemployment. It appears that no cannabis-related projects have secured funding.
  • The U.S. Citizenship and Immigration Service administers (USCIS) the EB-5 program. The agency falls under the federal Department of Homeland Security (DHS), which is considered anti-cannabis – given that marijuana is a Schedule 1 drug. It’s unclear whether the DHS has approved Bright Green’s plans, although the company said the USCIS processed the paperwork.
  • The EB-5 program has been linked to a long list of lawsuits and complaints of fraud.

Bright Green generated headlines last May after it became the first plant-touching business to trade on a major U.S. stock exchange – in this case the Nasdaq.

Its market value soared to $9 billion at one point.

But Bright Green’s stock – which trades as BGXX – has since plunged, from nearly $60 to less than a dollar, as investors reassessed the company’s business prospects.

The company has been touting for months that it has secured “conditional approval” from the U.S. Drug Enforcement Administration to cultivate cannabis for scientific researchers.

Bright Green isn’t guaranteed to win full DEA approval, however, and the company acknowledges it must receive the agency’s approval “in order to generate revenues.”

For his part, CEO Seamus McAuley said Bright Green’s large-scale plans are well suited for the EB-5 program.

“The cost of raising capital these days is difficult in general, and the cannabis markets are not immune to that in any shape or form,” he told MJBizDaily.

“So it seemed like quite a novel way of raising the requisite capital in order to move forward with our business plan without that necessary complication of the cost of raising capital elsewhere.” 

Investors initially cheered the announcement, driving the company’s stock price from 52 cents to $1.42. Bright Green shares were trading at 89 cents at the Nasdaq’s 4 p.m. ET close Tuesday.

New Mexico Gov. Michelle Lujan Grisham also is said to have applauded Bright Green’s funding plans.

“Bright Green, with access to the required capital, can now create and fulfill significant medical opportunities in the State,” the governor was quoted as saying in the company’s news release.

However, Bright Green hasn’t raised the required capital – at least not yet.

So far, the company has attracted investment from one source through the program, according to McAuley.

A news release announcing the investment didn’t disclose the amount.

McAuley, whose employment agreement states that he lives in Ireland, told MJBizDaily via email that he plans to invest in Bright Green through EB-5 “as a sign of commitment to the company” and to gain authorization to work in the United States.

How EB-5 works

Through the EB-5 program, international investors who put a minimum of $880,000 toward a project located in a targeted employment area (TEA) can qualify for a green card or permanent residency if the investment generates a minimum of 10 jobs.

Since 2008, $37.9 billion has been invested through the program, peaking at more than $7.5 billion in 2015, according to data collected by Washington DC-based nonprofit trade association Invest in the USA (IIUSA).

In 2022, IIUSA data shows approximately $435 million was invested through the program as a whole – less than the total amount Bright Green hopes to raise.

Most of the projects funded in part by EB-5 are construction-related and involve various types of real estate, including hotels, housing, manufacturing or infrastructure.

The location of Bright Green’s planned greenhouse construction in Grants, New Mexico, is a rural area that qualifies as a TEA, according to the IIUSA’s mapping tool.

Since 2008, zero projects have been funded in New Mexico through EB-5, according to IIUSA data, and no cannabis-related projects have been funded.

Will USCIS accept cannabis investment?

It’s unclear if the USCIS or the DHS will allow Bright Green to take advantage of the EB-5 program, even though the company could eventually win full DEA approval to produce research cannabis.

Neither the USCIS nor EB-5 Affiliate Network, the consulting firm and the so-called “regional center” Bright Green is working with to administer the program, immediately responded to MJBizDaily questions about DHS approval.

The DHS also didn’t immediately respond.

A Bright Green spokesperson told MJBizDaily via email that the USCIS had processed the company’s application and issued both a receipt and a new commercial enterprise identification number.

In an email to MJBizDaily, California-based immigration lawyer Bernard Wolfsdorf called the DHS’ attitude toward cannabis “brutal” and pointed to a 2019 USCIS notice advising that violators of federal controlled substance law might lack “good moral character,” which would preclude immigration approval.

“The mere fact that a lawful permanent resident who admits having used marijuana cannot even become a US citizen indicates that this would be a very risky immigration option for investors,” Wolfsdorf wrote said.

But Bright Green’s plans to become a federally regulated marijuana research cultivator could give it special status – provided it clears a number of legal and regulatory obstacles.

So far, the company has secured a memorandum of agreement from the DEA – which apparently is how it became the first plant-touching cannabis company to list on the Nasdaq.

But Bright Green still needs to fulfill some requirements before it is fully approved.

In an email to MJBizDaily, the Bright Green spokesperson said the company’s operations “are not just fully legal; they are supported by recent federal actions,” such as:

EB-5 projects “do have to secure the blessing of the Department of Homeland Security for these projects,” IIUSA Executive Director Aaron Grau said in an interview with MJBizDaily.

“They can’t just be willy-nilly thrown together. They do need to pass muster – and Bright Green obviously did.”

Michael Gibson, the managing director of USAdvisors, an EB-5 risk and due diligence investment advisory firm, doubts the suggestion that the DHS has clear oversight of the program.

“The Department of Homeland Security has very little idea of what most of these projects are up to,” he said.

Lack of transparency has been one of the chief criticisms of the EB-5 program, according to Gibson.

While the DHS is supposed to audit each project, neither that agency nor the USCIS publicly shares how many audits it completes each year or which projects have been reviewed. Gibson noted.

“That DHS or USCIS has any idea of what 90% of these projects are up to is laughable,” he said.

High risk and fraud allegations

The EB-5 program was designed to raise capital for projects in areas with low economic activity and high unemployment.

But there have been problems with it, such as projects raising capital in economically healthy areas, immigration attorneys accepting kickbacks to recommend certain investments or projects being fraudulent or only partially successful.

The ideal outcome of the program is that projects are funded and investors receive both a green card and their money back, Gibson said.

However, he said that’s the least common outcome. Instead, more often than not:

  • A project is funded and underway but a problem arises and the company goes out of business. Through the job creation, investors do receive a green card, but they could lose their investment.
  • The project doesn’t start, but the money is in escrow. Without any job creation, the investor is no longer eligible for a green card. But they might be able to retrieve their investment.
  • The project doesn’t start, but the money has been spent in ways that aren’t related to job creation, such as for personal use. In that case, the investor can lose both permanent residency eligibility and green card.

The last scenario is the one Gibson said the EB-5 program is “famous” for.

“Unfortunately, for many – I mean, thousands of investors – that has been the outcome,” he said.

In March 2022, President Biden signed the EB-5 Reform and Integrity Act to try to protect investors and ensure funds were going to the right programs.

Gibson, who is skeptical that it will help close the gaps exploited by bad actors, particularly when it comes to transparency, created a two-page due-diligence checklist to help investors vet potential projects.

Funding key for Bright Green’s future

Bright Green meets much of the criteria on the checklist.

As a Nasdaq-traded company, it files quarterly reports with detailed information about its pre-revenue status and deficits, which runs into the tens of millions

The company has sufficient working capital to pay its operating expenses for at least the next 12 months, according to the third-quarter financial report Bright Green filed with the U.S. Securities and Exchange Commission.

But the filing also notes that Bright Green’s future depends on securing additional funding.

“The Company’s continued existence is dependent upon its ability to continue to execute its operating plan and to obtain additional debt or equity financing,” according to the filing.

Hence the need for international investors to pony up funding.

Kate Robertson can be reached at [email protected]



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