Winnipeg-based cannabis producer Bonify has had its federal licences to produce and sell marijuana suspended by Health Canada, a move the federal cannabis regulator says it took because "(Bonify) was possessing, distributing and selling product that was purchased from an illegal source."
As well, the company was "selling product that did not comply with the Good Production Practices as required under the Cannabis Act" and its associated regulations, which are meant to "protect public health and safety," a statement from Health Canada said.
The licence suspensions follow late December revelations, first reported by the Free Press and The Leaf News, that Bonify sold cannabis sourced from outside the government-regulated supply chain to licensed cannabis stores in Saskatchewan. Three of Bonify's senior executives were fired in the wake of that incident, and an unnamed member of Bonify's board of directors was also suspended. Health Canada issued a voluntary recall of Bonify products, and sales of Bonify cannabis in Manitoba were suspended by provincial authorities.
And the Mounties are conducting a review of how the 200 kilograms of unregulated cannabis found its way into Bonify's supply chain.
Bonify turned its operations over to consultant George Robinson, the CEO and president of diversified cannabis firm RavenQuest BioMed. Robinson investigated how Bonify could have sold cannabis of unknown origin, and hosted a December 27 press conference to explain what happened. He's currently serving as Bonify's acting CEO and president.
In a phone interview Tuesday, Robinson said Bonify was formally notified of the suspensions in a Monday letter from Health Canada. He said the regulator suspended Bonify's licences because it was concerned the company wouldn't have proper management after March 31, when his management contract with Bonify is due to expire.
"So it's pushed us into moving a little bit quicker, to taking a look at extending the management services contract," said Robinson.
A Tuesday statement from Health Canada told a different story about the licence suspensions.
Health Canada spokeswoman Tammy Jarbeau, who provided the statement in response to an interview request, said the federal department suspended Bonify's licences after reviewing the company's operations.
"(Bonify) was possessing, distributing and selling product that was purchased from an illegal source, and selling product that did not comply with the Good Production Practices as required under the Cannabis Act" and its associated regulations, wrote Jarbeau.
Bonify has ten days to respond to Health Canada and explain "why the suspension is unfounded or (provide) information that Health Canada should take into consideration in its decision-making," said the statement.
Asked to clarify the discrepancy between his comments and Health Canada's statement, Robinson stood by his initial comments that the suspension was related to concerns over management continuity.
"What they've given you is a blank statement," said Robinson. "What I have in the letter (from Health Canada) is the real issues, which we're addressing."
Robinson said he's confident Bonify will get its licences reinstated. After he took the helm at Bonify, Robinson said, the company voluntarily asked for its cannabis sales licence to be temporarily suspended "while we verified the processes that led to the issues that were in place anyhow, from the previous management."
Robinson said his investigation into the sale of unregulated cannabis uncovered how the 200 kilogram shipment of marijuana was purchased, but not where it was actually produced. Robinson wouldn't reveal how the deal was done, citing his belief that the RCMP is undertaking a criminal investigation of what happened at Bonify.
"We know who was the person that brokered the purchase, that Bonify senior executives reached out to," he said.
"But that information would not be good, at this time, to be releasing, because that's part of the criminal investigation as I understand it."
Jarbeau wrote that Health Canada "has referred this matter to the Royal Canadian Mounted Police." RCMP Manitoba spokeswoman Tara Seel said Tuesday that the force "is presently assisting the province of Manitoba by assessing the information obtained to date with respect to the Bonify matter."
"The RCMP continues to conduct a review of this information and will determine the scope of a subsequent investigation, if any, upon completion of the review," wrote Seel in an emailed statement.
Solomon Israel is a full-time reporter for the Winnipeg Free Press and for two years, the lead writer for Free Press cannabis news site, The Leaf News. He continues to provide coverage of the cannabis beat while covering business in the city and province.