Headset Inc., a prominent marijuana industry data and analytics company, has agreed to pay more than $1 million to resolve federal allegations that it improperly received a Paycheck Protection Program (PPP) loan because its work with marijuana businesses made it ineligible for the federal assistance.
The U.S. Attorney’s Office for the Western District of Washington announced Monday that Seattle-based Headset agreed to pay $1,012,876 to resolve the claims. Headset does not admit wrongdoing and agreed to the settlement to avoid the risks of litigation.
Headset received the PPP loan in February 2021 and had the loan forgiven in August 2021, according to federal prosecutors.
The government alleges that Headset was not eligible for the Small Business Administration loan because it provides data analysis services to marijuana companies. Marijuana remains illegal under federal law despite being legal for medical or recreational use in most states.
In May 2024, Sidesolve LLC filed a whistleblower lawsuit alleging Headset was ineligible for the loan because of its work in the marijuana industry.
The case was brought under the qui tam provisions of the federal False Claims Act, which allow private parties to file lawsuits on behalf of the United States alleging fraud involving government programs and receive a share of money recovered.
Under the settlement, Headset paid $100,000 within 30 days of an agreement signed in early August. The company will pay the remaining more than $900,000 over four years, with payments concluding in August 2030.
Sidesolve will receive 10% of the amount Headset pays to the federal government, along with $20,000 for attorney fees and costs.
Headset, founded in 2015, provides marijuana market intelligence and analytics based on retail sales data. Its products are used to track sales trends, pricing, product performance and consumer purchasing patterns across legal marijuana markets.
The company said in 2023 that its systems had processed more than $50 billion in marijuana retail measurement data from thousands of retailers and dispensaries.
The settlement represents another example of the conflict between state marijuana legalization and continued federal prohibition, with businesses serving state-legal marijuana markets facing restrictions on access to federal financial programs.
Assistant U.S. Attorney Matt Waldrop negotiated the settlement on behalf of the federal government.
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