With supply of legal cannabis products in Canada facing a chronic shortage since legalization, at least one company has resorted to acquiring non-licensed product to meet unprecedented demand.
Winnipeg-based pot company Bonify recently ceased all sales as 210kg of non-licensed product was discovered, with some of that product sold in three Saskatchewan stores.
In response to that bombshell revelation, Bonify’s board has now retained marijuana consulting firm RavenQuest for oversight as the company moves to keep its licensing.
George Robinson — CEO of RavenQuest and interim CEO of Bonify — discussed the issue in an interview with BNN Bloomberg to explain how and why the cannabis was acquired.
Robinson downplayed questions regarding an organized crime connection that has cast a shadow over the legalized Canadian marijuana industry, but stated a broker acquired the cannabis from an unknown and non-licensed source.
That breaking of industry regulations was discovered when the company’s Cherry Lime Pie and Warlock Kush strains were found to have contaminants not allowed under the Cannabis Act and the prior Access to Cannabis for Medical Purposes Regulations.
The offending product was seized from shelves and Manitoba Premier Brian Pallister referred to the strains as actively illegal during a press conference last month, calling it a “black day” for the industry.
Bonify’s board subsequently removed three members of senior management and has shut down all operations while the issue is investigated by Health Canada.
One aspect of the interview may have a big impact on marijuana consumers and pot company shareholders alike. While answering questions, Robinson revealed he suspects other cannabis companies have also used non-licensed product, but simply haven’t been caught yet.
He commented: “There’s penalties and fees you have to pay to the province, so people are making some very bad choices.”
Referring to the unnamed broker and members of the company who were removed, Robinson added: “They are making claims they have been selling to other licensed producers. Everyone who has a supply problem may have been impacted by this type of activity.”
If that allegation is true, it could lead to further shortages with a potential chilling effect on the newly-legalized industry if licensed sellers are shut down by Health Canada for using non-authorized cannabis products to fill supply gaps.
Just last week, CEO Mark Goliger of National Access Cannabis Corp also conducted an interview with Bloomberg to state the illegal market would continue to thrive and undercut legal retailer pricing as supply is expected to remain low for at least another year.