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Only about half of all applications for security clearance by cannabis company executives have been granted by the government’s watchdog in charge of keeping criminals and gangsters out of the legal marijuana industry.
Health Canada’s Controlled Substances and Cannabis Branch received 6,398 security clearance applications linked to commercial cannabis licence applications as of July 31, according to government data provided at the request of National Post .
Of those, a little more than half — 3,433 — have been granted, allowing the applicants to remain as directors or officers of a company involved in the legal cultivation, processing or sale of cannabis.
Another 1,000 withdrew their applications before a decision was finalized. Details of why they were withdrawn are not available.
The government did not provide the precise number of applications who failed their security check and were refused a clearance, saying only that it is “less than 1.5 per cent,” so presumably that’s 95 applicants, or very close.
Of those, four people denied security clearance have gone to court to request a judicial review of the decision, as reported Tuesday by National Post .
Health Canada declined to identify the four, saying it was confidential business information. Court records show that Edmond Chiu, of We Grow BC Ltd., withdrew his court challenge when a resolution was reached and Kan Paul Lum, of Grun Labs, Inc., also in B.C., won his court appeal and his application was returned to Health Canada for a new assessment.
Its about seeing an existing industry and regulating it, not trying to create a new one
Two other challenges awaiting a court hearing were filed by Peter Wojcik, of Pharmagreen Biotech Inc. in B.C., and Silverio Manuel Dasilva, of Ontario’s Forest Farms Growth Corp. Their lawyer said a third client is preparing his challenge.
The remaining applications, approximately 1,870, are currently at some stage of being processed, including those placed on hold pending further information to Health Canada from the applicant, according to the latest data available.
Under the 2018 cannabis regulations, the government requires security clearance for the directors and officers of a corporation holding a licence for the cultivation, processing or sale of cannabis.
“The integrity of the system of licensed production of cannabis is of utmost priority. A very rigorous security screening process is in place for all federally licensed facilities that produce cannabis,” said Geoffroy Legault-Thivierge, a spokesman for Health Canada.
He said applicants are carefully assessed in a process that can take months.
“Applicants who wish to become cannabis licence holders must undergo an in-depth security clearance process,” he said.
The background checks include a criminal record check, an RCMP check for associations with organized crime figures or other adverse information; and a check of law enforcement agencies’ intelligence files and databases.
Under the Cannabis Act and its regulations, reasons for denying a security clearance include associations to organized crime and past convictions for, or an association with, drug trafficking, corruption or violent crimes.
One factor the assessment includes, according to recent court files, is the likelihood an applicant would divert corporate cannabis output to the illicit market.
John Conroy, a veteran B.C. lawyer who has fought for marijuana reform for more than 20 years, and who represents Dasilva and Wojcik in their fight for a security clearance, said the government’s approach is misguided.
“The government has made this huge mistake of doing these security clearances to push out the existing industry to compete with them, even though they claim they are doing all this to legalize and to bring everybody in,” Conroy said in an interview.
The government “created a new industry — that’s failing — instead of bringing in the existing industry.
“You have a police mentality that they’ve used in this process. They should transition a lot of the traditional craft growers in instead of pushing them out.”
Conroy compared it to alcohol bootleggers at end of Prohibition in the 1920s in Canada and the 1930s in the United States.
“Sam Bronfman was the biggest bootlegger on the West Coast, wasn’t he? What did we do with the Bronfmans and the Kennedys and the Seagrams? Did you squeeze them out? Absolutely not, you rolled them all in. It’s about seeing an existing industry and regulating it, not trying to create a new one.”
The government argued in court during a recent security clearance appeal that the unique place of cannabis justifies giving it special scrutiny.
Because cannabis production was a “nascent industry” for a product previously prohibited as a controlled drug, government lawyers said, even peripheral associations with crime were a serious concern when protecting the public.
Copyright Postmedia Network Inc., 2020