City firm sold il­le­gal weed: source

‘Black day for the distri­bu­tion of le­gal cannabis’: Pallister

Winnipeg Free Press - - FRONT PAGE - SOLOMON IS­RAEL

WIN­NIPEG-BASED li­censed pro­ducer Bonify al­legedly bought il­le­gal mar­i­juana, then sold it on the gov­ern­ment-reg­u­lated re­cre­ational cannabis mar­ket, a source with knowl­edge of the sit­u­a­tion has told the Free Press.

In mid-Novem­ber, a whistle­blower at Bonify told fed­eral cannabis reg­u­la­tor Health Canada the com­pany had pur­chased 200 kilo­grams of il­le­gal mar­i­juana from out of prov­ince, ac­cord­ing to the source, who said the un­li­censed prod­uct was stored at the com­pany’s North End fa­cil­ity.

On Dec. 7, Bonify vol­un­tar­ily re­called 52 pack­ages of cannabis sold at three li­censed stores in Saskatchewan. At the time, Health Canada said the mar­i­juana was re­called be­cause Bonify couldn’t prove those spe­cific lots had passed lab­o­ra­tory test­ing for con­tam­i­nants.

How­ever, the source said the re­called cannabis was the same prod­uct Bonify al­legedly got out­side the li­censed regime. The source said Health Canada seized cannabis from Bonify on Dec. 13.

The Free Press broke the story at noon Thurs­day. Three hours later, Man­i­toba Pre­mier Brian Pallister called the sit­u­a­tion “a black day for the distri­bu­tion of le­gal cannabis” dur­ing an im­promptu news con­fer­ence in the ro­tunda of the Man­i­toba Leg­isla­tive Build­ing.

“It casts a pall on the other com­pa­nies, who didn’t do any­thing wrong, who are work­ing through the sys­tem. We want to make sure we pro­tect the in­tegrity of that sys­tem, be­cause our com­pe­ti­tion is the un­der­ground econ­omy,” said Pallister.

“And if peo­ple aren’t con­fi­dent that our sys­tem works well to pro­tect them... they’ll go back to their old sup­plier and get it out of the al­ley.”

The pre­mier crit­i­cized what he de­scribed as a lack of com­mu­ni­ca­tion from Health Canada, say­ing the Man­i­toba gov­ern­ment only heard about prob­lems at Bonify on Tues­day, a week-and-a-half af­ter the re­call be­gan. Pallister said Man­i­toba was no­ti­fied by Bonify it­self, not by Health Canada.

“When (Health Canada finds) out that a non-reg­u­lated, non-ap­proved prod­uct has en­tered into the stream, I would think it would be pretty log­i­cal to ex­pect they should no­tify us, right away,” he said.

Pallister said his gov­ern­ment no­ti­fied the Win­nipeg Po­lice Ser­vice about the sit­u­a­tion, who ad­vised it to con­tact the RCMP. A Man­i­toba RCMP spokes­woman wouldn’t con­firm or deny whether the force is in­ves­ti­gat­ing Bonify, cit­ing pri­vacy and op­er­a­tional con­cerns.

The pre­mier said the provin­cial gov­ern­ment is con­cerned the al­legedly il­le­gal cannabis “may have been” sold by li­censed stores in Man­i­toba. Although it’s not clear whether the prod­uct is un­safe for hu­man con­sump­tion, he said, “We’re act­ing as if it is, and I think that’s the only ap­pro­pri­ate course of ac­tion to take here.”

Man­i­toba sales and distri­bu­tion of Bonify cannabis have been sus­pended, said a joint state­ment is­sued Thurs­day by Man­i­toba Liquor & Lot­ter­ies (MLL) and the prov­ince’s re­tail cannabis reg­u­la­tor, the Liquor, Gam­ing and Cannabis Au­thor­ity of Man­i­toba.

The reg­u­la­tor is seiz­ing Bonify prod­ucts from li­censed cannabis stores in the prov­ince, and is ad­vis­ing con­sumers to re­turn any Bonify prod­ucts for a re­fund. Bonify prod­ucts “have been delisted and re­moved” from MLL’s cat­a­logue of whole­sale prod­ucts.

Health Canada con­firmed in a state­ment its in­spec­tors “re­cently vis­ited the Bonify site,” and said its on­go­ing in­ves­ti­ga­tion has not yet de­ter­mined whether or not fed­eral law was vi­o­lated.

The fed­eral Health Depart­ment said its reg­u­la­tory regime for cannabis pro­duc­tion “con­tains mul­ti­ple mea­sures that are de­signed to pro­tect the health and safety of Cana­di­ans and the in­tegrity of the sys­tem,” adding it takes com­plaints about li­censed cannabis pro­duc­ers se­ri­ously.

“The depart­ment re­mains fully com­mit­ted to shar­ing in­for­ma­tion with part­ners, in­clud­ing provin­cial and ter­ri­to­rial of­fi­cials and law en­force­ment, as ap­pro­pri­ate,” the state­ment said.

Bonify’s board of direc­tors said in a state­ment a re­view by Health Canada and a third-party con­sul­tant “has re­vealed ir­reg­u­lar­i­ties per­tain­ing to the re­called prod­uct.”

“An in­ves­ti­ga­tion into these ir­reg­u­lar­i­ties is on­go­ing and Bonify’s board will be able to pro­vide fur­ther com­ment at the ap­pro­pri­ate time af­ter the in­ves­ti­ga­tion reaches its con­clu­sion,” the state­ment said.

Un­der the new fed­eral Cannabis Act, “il­licit cannabis” is de­fined as any mar­i­juana “sold, pro­duced or dis­trib­uted” by some­one with­out gov­ern­ment au­tho­riza­tion to do so.

If Bonify did in­deed pass off il­licit cannabis as a le­gal, gov­ern­ment-reg­u­lated prod­uct, the con­se­quences could be se­vere.

Distri­bu­tion of il­licit cannabis can be an in­dictable of­fence car­ry­ing a max­i­mum penalty of 14 years in prison. For an or­ga­ni­za­tion, know­ingly dis­tribut­ing il­licit cannabis could also mean the im­po­si­tion of hefty fines.

If the al­le­ga­tions against Bonify are true, the com­pany stands to lose its valu­able gov­ern­ment per­mits to grow and sell mar­i­juana, said a lawyer who spe­cial­izes in cor­po­rate cannabis law.

“If it turns out it’s true that a li­censed pro­ducer know­ingly bought il­le­gal cannabis from the black mar­ket, and then sold it into the le­gal mar­ket know­ingly, I don’t see how the gov­ern­ment can do any­thing less than take their li­cence away,” said Matt Mau­rer, vice-chair­man of the cannabis law group at Toronto firm Torkin Manes.

In its state­ment, Health Canada said it “will not hes­i­tate to use the en­force­ment tools avail­able un­der the Cannabis Act when it en­coun­ters in­stances of non-com­pli­ance.”

It’s sur­pris­ing such an al­leged in­frac­tion could hap­pen at such a high level in Canada’s fed­er­ally reg­u­lated cannabis sup­ply chain, said the owner of a li­censed cannabis store in Saskatchewan that sold one pack­age of the Bonify prod­uct be­fore it was re­called.

Ev­ery­one in­volved in the new mar­ket for re­cre­ational mar­i­juana is “well aware that we have to be very care­ful where we source our prod­uct for sale,” said Ge­off Conn, owner and gen­eral man­ager of the Pot Shack in Saska­toon.

“The gov­ern­ment made it per­fectly clear, as we were re­ceiv­ing our li­cence, that we have to main­tain in­tegrity for our sup­ply across the board,” he said.

Conn said his store posted the re­call no­tice for the Bonify cannabis it sold, but the cus­tomer who bought the re­called prod­uct hasn’t re­turned.

“They prob­a­bly just con­sumed it and went on their merry way, you know?”

MIKE DEAL / WIN­NIPEG FREE PRESS

Bonify pro­duces cannabis at a North End fa­cil­ity.

MIKAELA MACKEN­ZIE / WIN­NIPEG FREE PRESS

Sales and distri­bu­tion of Bonify cannabis have been sus­pended in Man­i­toba af­ter a re­call due to con­tam­i­na­tion con­cerns. Pre­mier Brian Pallister says the prov­ince is act­ing on the as­sump­tion the prod­ucts are un­safe.

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