STOCK PRICE SPARKED SILENCE
2014 B.C. POT BUST Government embarrassment worried RCMP
In the spring of 2014, RCMP officers in Kelowna, B.C., prepared a press release about a big drug bust at the local airport. It described how investigators had intercepted two shipments of marijuana of “unfathomable quantity” that were bound for a couple of licensed cannabis producers in Ontario. The press release, however, was never sent.
Days went by with a virtual information blackout over what the Mounties had seized and why, even after one of the companies — Tweed Marijuana Inc., now Canopy Growth Corp. — decided to release its own public statement, containing what some RCMP members perceived to be “brutally misleading” information about the seizure.
“I don’t see how we can’t comment as we are now being put in a negative light,” one frustrated sergeant wrote to a colleague in an email. “Basic media principles state that we should confirm the obvious — Tweed has chosen to put this out there so we would be remiss if we did not comment on factual points that have been inaccurately represented.”
More than 900 pages of internal records obtained by the National Post reveal for the first time the lengthy deliberations that took place among RCMP members in B.C. and at RCMP headquarters in Ottawa over what, if anything, to tell the public about the March 31, 2014, seizures at Kelowna International Airport.
Among the “strategic considerations” outlined in emails was a concern that the release of information might affect the stock price of Tweed, which had gone public on the Toronto Stock Exchange that week — the first pot producer in the country to do so.
There were also concerns that the release of information could embarrass Health Canada and expose “deficiencies” in new regulations over medical marijuana production that were rolling out that same week.
The National Post first sought access to the records five years ago through an access-to-information request. The RCMP initially refused to release any records, citing an ongoing investigation. The Post complained to the federal information commissioner, resulting in a process that dragged on until last fall when the RCMP finally agreed to process some of the records.
Asked this week about the national police force’s apparent concern over the impact of publicity about the bust on the company’s stock price and the potential political embarrassment to the federal government, B.C. RCMP spokeswoman Sgt. Janelle Shoihet said she needed more time to review the file. “Generally we can say that decisions with regards to communications will always consider impact on prosecution, timing and whether (or) not a company is publicly traded. These factors have been considered in the past and were not unique to this investigation,” she wrote.
“Impacts on partners, disclosure, potential or active prosecutions and privacy legislation must all be considered when determining what, if any, information can be made public.”
But Garry Clement, a retired RCMP superintendent, said whether a company is publicly traded or not should not have been a consideration.
“When you see something like that, how can you say the RCMP is being objective? They’re playing in the hands of the company. Investors may have made a decision differently had they known the facts,” he said. “It doesn’t give the impression of being upfront.”
In September 2015, Tweed was renamed Canopy Growth Corp. Jordan Sinclair, Canopy Growth’s vice-president of communications, said in an email this week the seizures happened more than five years ago when the Marijuana for Medical Purposes Regulations were in their infancy.
“The company believed then and now that it acted in compliance with regulations. Today, we are focused on the next five years and continuing to build a global cannabis leader creating thousands of jobs in Canada, investing hundreds of millions of dollars into the Canadian economy, and providing the highest quality cannabis products to medical and adult-use customers around the world.”
Mettrum Health Corp, the other Ontario producer whose shipment was seized that day, was acquired by Canopy Growth in early 2017. A former spokesman for Mettrum did not respond to an email requesting comment.
The seizures happened against a backdrop of dramatic change in Canada’s regulatory landscape. New rules took effect on April 1, 2014 that restricted production of medical marijuana to licensed commercial producers. Tweed and Mettrum were among the first to be licensed.
Prior to the transition date, individuals who had
DOESN’T GIVE THE IMPRESSION OF BEING UPFRONT.
possessed personal-production licences under the old regime were able to sell their starting materials — namely seeds and plants — to one of the new commercial producers, as long as they had Health Canada approval. Tweed and Mettrum received those approvals, Health Canada confirmed to reporters at the time.
But according to internal RCMP briefing notes, the items Tweed and Mettrum told Health Canada they would be importing from B.C. did not match what was seized at the Kelowna airport on March 31.
On paper, Tweed and Mettrum said they planned to transport 2,071 plants and 730 plants, respectively. But when RCMP examined the shipments, they instead found harvested marijuana buds that were packaged for resale, the records say.
“At best what has been seized are clippings,” a summary report stated. “The (regulations) do not allow for the sale of marijuana in this form.”
And there was a lot of it — more than 700 kilograms of B.C. bud stored in 55 hockey bags and 40 boxes.
A draft press release prepared by the Kelowna RCMP’s media relations officer on April 1 noted that the seizure was of a quantity “rarely seen in the central Okanagan.”
But senior officers, including the Kelowna detachment’s commanding officer, decided to hold off on the release, citing the lack of any charges.
A couple days later, on April 3 — the day before Tweed was listed on the TSX Venture Exchange — the company put out its own statement. Tweed said it had completed the acquisition of “seeds and plants” from a number of licensed growers, ensuring a “wide variety of choices” and sufficient inventory to meet demand.
The company acknowledged that one shipment had been held by the RCMP “while it confirms the details of the shipment.”
“In an effort to be transparent,” the statement continued, the RCMP was informed of the shipment and “invited to examine the material.”
Tweed chairman Bruce Linton told Postmedia at the time the seizures may have been the result of “confusion” over the old and new regulatory regimes.
In internal emails, RCMP officers wrote that the company’s version of events was “a long way from what transpired.” Officers also balked at the company’s assertion that it had invited the RCMP to inspect the shipment. “Tweed never came to us, the airline did,” Const. Shane Holmquist wrote to colleagues.
Noting that some of the information in Tweed’s release was “factually incorrect,” Insp. John Ibbotson suggested there had been a violation of section 400 of the Criminal Code — related to making a false prospectus — and wondered if the Ontario Securities commission should be notified.
Yet for several more days, RCMP communications officers declined to set the record straight, trotting out the standard line that they could not confirm nor deny an investigation.
“With some luck the media may dig up the facts and print them without the RCMP having to go public with any details and face the complications that would create,” Sgt. Duncan Pound, then a federal policing spokesman in B.C., wrote to a colleague.
Other emails reveal some of the reasons for the hesitation.
“The heart of the problem is that Health Canada has gone on record as saying they authorized the shipment, which has and will continue to cause us grief trying to set the record straight,” Pound wrote.
“Ideally,” he continued, Health Canada should issue a statement saying the shipments contravened regulations and were not what they had authorized.
Jolene Bradley, the RCMP’s director of strategic communications in Ottawa, presented a briefing document to the deputy commissioner for federal policing on April 10 advising that the force should continue to decline comment. Among the reasons she cited: going public “would likely bring criticism on Health Canada’s part as it would highlight the deficiencies in the transition to the new regulations.”
The same document also stated that “any comments by the RCMP could impact stock prices” for the producers.
Dawn Roberts, an RCMP communications strategist in B.C., similarly wrote in an email to colleagues that Tweed “is a publicly traded company and any comments could impact on stock prices.”
Pressure, however, was starting to build “from higher up to proactively correct the story,” RCMP emails say.
The force eventually issued its first public statement about the March 31 seizures on April 11. The final version of the statement did not mention the size of the seizure nor the specific reason, simply stating: “The marijuana did not match what was authorized to be transferred.”
No charges were ultimately filed against either company due to the challenge of proving criminal intent, RCMP briefing notes say. The seized marijuana, which caused a rotting smell in RCMP storage, was later destroyed.