A 51-year-old Oklahoma City real estate broker pleaded guilty on Sunday to a federal drug conspiracy charge, telling a federal judge that he helped run an alleged scheme that let out-of-state investors control Oklahoma medical marijuana grows through fake local ownership. Chong Iu Phu's admission in Oklahoma City federal court also implicated his co-defendant, a politically connected attorney who once advised Gov. Kevin Stitt during the pandemic.
According to The Oklahoman, Phu's guilty plea directly points to Matthew Alan Stacy, the attorney named as his co-defendant in the case. Stacy is the same lawyer who spent part of the pandemic advising the governor's office, a background that has made the criminal case unusually sensitive in Oklahoma political circles.
A Pandemic Adviser With No Medical Background
Stacy, a lieutenant colonel in the Oklahoma Army National Guard and a decorated veteran, served as an adviser to Stitt on a hospital surge plan, sat on the governor's COVID-19 response team, and held a seat on the Governor's Council on Science and Innovation, according to Business Insider. He was appointed to help coordinate the state's pandemic surge response despite having no medical background, the outlet reported.
Federal prosecutors unsealed an eight-count indictment against Stacy, Phu and a third defendant, Chanh Iu Phu, in April 2024, charging all three with drug conspiracy and maintaining drug-involved premises tied to an alleged ghost licensing scheme running from August 2019 to March 2023, according to the U.S. Attorney's Office for the Western District of Oklahoma. Oklahoma law requires commercial marijuana grow businesses to be at least 75% owned by state residents to hold a license through the Oklahoma Medical Marijuana Authority, a rule enacted after voters legalized medical marijuana in 2018 that prosecutors say the scheme was designed to dodge.
How the Alleged Scheme Worked
State court affidavits described a lucrative arrangement on both ends of the alleged network, per Cannabis Law Report. Out-of-state marijuana operators allegedly paid Stacy up to $60,000 per business setup, while Oklahoma residents recruited to lend their names to license applications as ghost owners received around $5,000 a year per license, the outlet reported.
State Prosecutors Moved First
Stacy's legal troubles began well before the federal case landed. A multi-county Oklahoma grand jury indicted him on state felony counts in late 2022 in Garvin County District Court, and Attorney General Gentner Drummond announced in February 2023 that his office would take over the prosecution from local county prosecutors, according to the Oklahoma Attorney General's Office. State affidavits alleged Stacy served as registered agent for more than 300 limited liability companies.
Stitt moved quickly to separate himself from Stacy once the state charges surfaced. After the October 2022 indictment, the governor announced he would donate Stacy's $2,900 campaign contribution, the maximum allowed under state law, to charity rather than keep it in his reelection fund, Cannabis Law Report reported at the time.
Stacy Says the Case Belongs in State Court, Not Federal
Stacy has maintained his innocence throughout both the state and federal proceedings. In an appeal filed with the Tenth Circuit Court of Appeals in September 2025, he argued that federal budget riders bar the Department of Justice from spending federal funds to prosecute state-level medical marijuana activity.
A Shrinking Industry Under Pressure
The case lands amid a broader contraction of Oklahoma's legal cannabis industry. Active commercial cultivation licenses in the state fell from more than 9,000 in 2021 to 1,825 by July, a drop driven by a licensing moratorium running through 2028 and an aggressive law enforcement crackdown, according to CRB Monitor.
That boom-then-bust cycle traces back to the years right after voters approved State Question 788 in 2018, when a flood of out-of-state capital into Oklahoma's cannabis market pushed lawmakers to pass House Bill 2272 in 2021, tightening ownership disclosure rules, according to the Purcell Register. Public records reviewed by the paper showed Stacy had served as registered agent for hundreds of commercial entities during that expansion.
Stacy and Phu Are Far From the Only Targets
Oklahoma authorities have gone after other attorneys accused of running similar straw-ownership arrangements, including the 2022 arrests of Eric Brown and Logan Jones and the July 2025 conviction of Kevin Pham, which triggered the revocation of 160 associated licenses, per the same CRB Monitor report. Regulators have moved to systematically revoke licenses tied to any convicted straw owner, the outlet noted.
Hoodline has covered the wider enforcement push for months, from a Nowata raid that uprooted 49,257 plants in June to the Attorney General's $1.5 billion multistate bust earlier this year. Both cases, like Stacy's, centered on out-of-state ownership hidden behind Oklahoma front owners.
Several questions remain unresolved. It's unclear whether Phu's plea agreement requires him to cooperate against Stacy at trial, how the parallel state and federal cases against Stacy will ultimately be resolved, or what will happen to any active licenses still tied to entities the two men helped set up.
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