Investigative Report Rips Into WeHo Pot Vending Machine Company Medbox


While West Hollywood company Medbox, the maker of vending machines dispensing bags of marijuana to registered users, has seen its stock soar with the booming new business of legally selling medical marijuana in the United States, a recent report from the Southern Investigative Reporting Foundation has uncovered a number of concerns about the company during a months-long investigation.

The foundation’s report says it has “uncovered a host of disclosure issues, baffling related-party transactions and substantial problems with the company’s accounting.” Much of its critique, however, centers on Medbox founder Vincent Mehdizadeh, a 34-year-old with a long record of legal issues, many of which have not been disclosed to investors, according to the foundation report. In just one year, traded shares have risen from less than $3 per share to $20, at one point peaking at $215.

“The company sits at the intersection of two American passions—the stock market and getting high,” said the foundation, which examined Medbox’s public filings, records of people involved with the company and Mehdizadeh’s background.

Medbox responded Tuesday to the report, written by Roddy Boyd, calling it a “reckless attempt at investigative journalism.”

“I have witnessed a person calling himself a professional journalist resort to defamatory statements, the majority of which are in most cases half-truths and in some cases a complete fabrication of events that purportedly transpired in my life before I founded Medbox,” Mehdizadeh said.

Mehdizadeh said he will “seek legal recourse against the reporter in question.”

Medbox’s kiosks, installed in hospitals, pharmacies, alternative clinics and prisons, provide people with the medication after scanning their fingerprints. The company has set up 165 kiosks in four states that have legalized marijuana sales: California, Arizona, Colorado and Massachusetts.

On Aug. 29, the Justice Department updated its federal marijuana enforcement policy in light of state ballot initiatives that legalized small amounts of marijuana. While the drug remains illegal federally, the department announced it will defer to states to enforce their marijuana laws.

Mehdizadeh has previously been arrested or has pleaded no contest for breaking and entering, credit card fraud, solicitation of a prostitute and trespass with intent to injure, according to the foundation.

When reached for comment, Mehdizadeh said that he was never charged with the trespassing, solicitation and credit card fraud claims.

Most alarming, according to the foundation, is a legal referral business, Active Lawyers, that Mehdizadeh ran with his father from 2005 to 2008. Active Lawyers misled customers by referring them to a law firm that billed them but never finished the job, the foundation said. Mehdizadeh, who does not have a law degree, also allegedly posed as a lawyer and issued legal advise.

This summer, Mehdizadeh pleaded no contest to various criminal charges regarding Active Lawyers brought by the Los Angeles County Department of Consumer Affairs. He avoided a four-year jail sentence by paying $450,000 in restitution to his victims.

Mehdizadeh also disputes that he has not disclosed the recent Department of Consumer Affairs legal problems with investors. He points to a press release he published on July 29 titled “Target of LA Criminal Investigation Has 13 Felony Counts Dismissed and Walks Away Vindicated.”

As for Medbox and its rapid-growth claim, the foundation’s report revealed that until September the company didn’t have a full-time chief financial officer and previously used an auditor sued by the Securities and Exchange Commission before turning to Mehdizadeh’s personal accountant.

For a full look at the report, click here.

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