From Seed-to-Scandal: BioTrack faces Legal Trouble in Florida
In a recent investigation, BioTrack, a cannabis tracking company with state contracts across the U.S., has been linked to two individuals involved in a high-profile insider trading scandal. The two men, Michael Shvartsman and Eric Hannelius, were penalized for their roles in illicit trading connected to a company that merged with Trump Media & Technology Group Corp. Their involvement with BioTrack has raised questions about the integrity of the cannabis industry, especially as BioTrack continues to hold critical contracts for tracking legal marijuana sales in several states.
The Allegations and BioTrack's Role
Shvartsman and Hannelius were both implicated in insider trading linked to a company that later merged with Trump Media. In October 2023, Shvartsman was sentenced to over two years in prison after pleading guilty to securities fraud, having made millions from illegal trades. Hannelius settled a civil suit in September, agreeing to pay a penalty related to his involvement in the same scheme.
Both men have been linked to Alleaves, the parent company of BioTrack, through their ownership of an Alleaves subsidiary that acquired BioTrack in 2023. Corporate records show that Shvartsman and Hannelius, along with Hannelius’s wife, were listed as beneficial owners of this subsidiary, which eventually gave them control over BioTrack. While Alleaves has denied that the men currently hold any role at the company, the connection has raised concerns.
Florida’s cannabis tracking contract with BioTrack, which is worth up to $768,000 over five years, stipulates that anyone convicted of fraudulent practices cannot work on the project. If Shvartsman is found to be involved with BioTrack, it could lead to legal complications and the potential loss of the contract. The Florida Department of Health, responsible for overseeing the state's medical marijuana program, has yet to comment on the matter.
BioTrack's Operations and Presence Across States
BioTrack, headquartered in Florida, operates traceability systems for the legal cannabis industry, ensuring that marijuana grown in legal markets is properly tracked from "seed-to-sale." In addition to Florida, BioTrack provides its software and services in several other states, including Arkansas, Delaware, Hawaii, Illinois, New Mexico, New York, and North Dakota. It also runs medical marijuana portals for patients in New Hampshire and Virginia.
Legal and Market Implications of the Insider Trading Connection
The revelation of Shvartsman and Hannelius's involvement in the insider trading scheme could have far-reaching implications for BioTrack, particularly if a lawsuit or further investigation reveals misconduct or non-compliance with state regulations. The potential loss of contracts with states like Florida could damage BioTrack’s business, leading to a drop in revenue and a loss of credibility in an industry that is still maturing.
As cannabis continues to grow as a legal market in the U.S., with sales expected to reach nearly $43 billion in 2024, the stakes are high for companies like BioTrack. While the industry remains highly profitable, it is still legally complex, and companies involved in cannabis tracking must navigate not only the challenges of compliance with state laws but also the ongoing uncertainty surrounding federal cannabis regulation.
Allegations of Deception in Cannabis Banking
BioTrack’s parent company, Alleaves, has also been linked to allegations of fraud and breach of contract. A pending lawsuit by an Oklahoma bank accuses Shvartsman and Hannelius of concealing ties to the cannabis industry in financial dealings. While Alleaves itself was not named in the lawsuit, the controversy highlights ongoing challenges in cannabis banking, where federal prohibition forces companies to navigate complex workarounds.
Alleaves’ cashless payment systems have been marketed as a solution for dispensaries, disguising cannabis transactions as standard debit withdrawals to circumvent banking restrictions. The company integrates these systems with BioTrack’s software, making the allegations against its former leaders particularly damaging.
Conclusion
BioTrack's connection to the insider trading scheme involving Shvartsman and Hannelius raises serious questions about the company's leadership and its role in the regulated cannabis industry. As states like Florida debate expanding legal marijuana use, regulators will need to ensure that companies providing critical infrastructure for cannabis tracking uphold the highest standards of integrity and transparency.
