Despite security checks by Health Canada, investors with Mafia connections involved in legal production
Marie-Maude Denis · CBC News · Posted: Nov 01, 2018
An investigation by Radio-Canada's Enquête shows Health Canada has granted production licences to companies with individuals with links to the criminal underworld. (Tijana Martin/Canadian Press)
An investor in a major Canadian cannabis company has had longstanding ties, including business dealings, with influential Mafia members and drug traffickers, Radio-Canada has learned.
Another investor in the same company has links with a prominent member of the Rizzutos, the powerful Montreal crime family.
In still another case, an individual managed to sell his cannabis business to one of the big players in the industry, despite his connections to drug traffickers. In return, he received shares in the company and rented out space for a cannabis grow-op.
- Federal ministers defend cannabis rollout after Enquête uncovers ties to organized crime
- Enquête examined hundreds of documents as part of its investigation, including reviews conducted by Canadian securities oversight bodies. Enquête is not naming the companies or individuals involved.
Security checks only scratch the surface
Throughout the period in which Canada's cannabis industry was developing, primarily for medical purposes, only individuals who directly ran the companies were required to obtain a security clearance.
The black hole of trusts
It's not uncommon for cannabis companies to be funded through family trusts.
Originally designed for estate and tax planning, trusts are an ideal way to hide individuals with interests in a business, said Marie-Pierre Allard, who studies tax policy at the Université de Sherbrooke.
"The beneficiaries of the trust are not disclosed publicly. It's anonymous," she said, adding that it is "one of the great vulnerabilities of the Canadian legal system."
"If we want to eliminate the Mafia cannabis market, we cannot allow them to use tax havens or trusts to enter indirectly through the back door," Carignan said.