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Medical marijuana grow licences exploited by criminals to sell weed on the illegal market, police say

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Lack of oversight allows system to be exploited, activist says

A lack of oversight into who is growing medical cannabis and how much is being grown is allowing criminals to sell pot on the illegal market, according to police and pot activists.

That’s creating tension in residential neighbourhoods in Winnipeg where large amounts of plants are being grown and with medical marijuana users who say it’s not fair the laws meant to help people who need pot are being exploited for financial gain.

“The lack of oversight by Health Canada has allowed the system to be manipulated and abused by people who are only in it for their own personal benefit,” said cannabis activist and medical licence holder Steven Stairs.

There are nearly 34,000 Canadians with a licence to grow medical cannabis, including 11,000 in Ontario and a little more than 1,600 in Manitoba.

Health Canada doesn’t limit the amount of cannabis doctors can authorize for a patient’s use and Stairs says that opens the door for people to get medical licences to grow marijuana legally to skirt the system and sell it for profit.

“Over time, the allure, I would call it, of having a legitimate or legal protection under Health Canada’s medical marijuana access regulations to grow cannabis was a very tantalizing opportunity for organized crime and for those who are looking to profit off a system designed for sick people there,” said Stairs.

He says back in 2009 when he first got a medical cannabis licence to use and, in 2010, a licence to grow, Health Canada regulations required a patient see their regular doctor or a specialist to get an authorization.

Stairs says now you can go online and pay a doctor to give you an authorization or walk into what he calls a “pay for access clinic” where you are charged a fee for a prescription — which is against Manitoba regulations.

The average amount of medical cannabis Canadian doctors are authorizing their patients to consume is 2.1 grams a day, according to Health Canada. Using Health Canada’s online calculator, that means those patients would be allowed to grow up to 10 plants.

But a simple online search finds companies offering to help Canadians obtain a doctor’s authorization for 95 grams a day, which will allow them to grow 463 plants.

“I would be curious to learn more about the people who are growing 500 plants for their own personal use,” said Dr. James MacKillop, a clinical psychologist and director of the Michael G. DeGroote Centre for Medicinal Cannabis Research at McMaster University in Hamilton.

“The idea that a person would need 500 plants to me seems extremely improbable … I think what it reveals is a loophole and the peculiarities of medical cannabis.”

If a doctor authorizes cannabis for a patient to use, Health Canada will allow that patient to access it. But the regulatory body says it does not supervise doctors. That responsibility falls on provincial laws and professional colleges.

“The determination as to whether cannabis is appropriate for a patient is best made through a discussion between a patient and their health care practitioner. Health Canada does not play a role in this determination,” said a Health Canada spokesperson in an email to CBC News.

Neighbours question large grows and who’s growing

CBC News began looking into complaints from residents in several Winnipeg neighbourhoods who say there are medical grow-ops where no one is living in the homes. Health Canada says it doesn’t require anyone to live in the homes and it’s up to municipalities to regulate, but neighbours wonder if the grow-ops are for legitimate medical marijuana patients’ personal use if no one lives there.

Some of the residents took their concerns to Winnipeg city hall this week because there are no regulations against having marijuana grow operations in residential areas.

CBC News knocked on the doors of more than two dozen homes suspected of housing medical marijuana grow-ops. Most appeared vacant, although some owners came to the door, while others responded via video doorbells from different locations. Almost all of the houses had security cameras set up outside, and in some cases, cannabis could be smelled from the street.

CBC also sifted through court documents, land titles and permits for each address and found 34 of the houses had recently upgraded electrical panels. Ten had previous electrical permits in which city inspectors said they were former grow-ops.

WATCH | Medical marijuana grow licences exploited:

Medical marijuana grow licences exploited

CBC News Manitoba

3 months ago Video

In five instances, CBC found medical grow operations in homes where the owners were convicted of marijuana-related offences.

Health Canada regulations do not allow anyone convicted of a marijuana-related crime to have a licence to grow, but there are no rules saying any other family member in the same house would not be able to obtain a licence.

Smelly home in Sage Creek

“There was months we didn’t have our grandkids over here because we just didn’t think it was safe for them,” said Carmen Nedohin.

She says the owners of a home next to hers in Sage Creek, an upscale neighbourhood in southeast Winnipeg, was converted into a medical cannabis grow-op last year.

“In September of 2019, we realized something was going on because they put in a high-level security system. They added an extra air conditioning unit and put a number of mushroom stacks on the top of the roof. And it was only a couple of weeks later when the smell really, really started,” said Nedohin.

She called police, city officials and even Manitoba Justice and later learned the man who owns the home was growing 600 plants on four licences from Health Canada. Nedohin says officials called in the fire department and shut off his gas because the owner didn’t have the proper electrical permits. She says the next day, she saw the fire department come in and take the meter right off the house.

Court records show in 2013, the homeowner was convicted of drug production and trafficking after police raided three houses his wife owned, including the one in Sage Creek next door to Nedohin. Police affidavits say officers found more than a thousand cannabis plants at two of the homes. At the time neither the man nor his wife had a Health Canada licence to grow, according to court documents. Neither were charged by police in 2019.

“How can individuals who have criminal records get a licence to grow medicinal marijuana in that kind of quantity? It just makes no sense to me whatsoever,” Nedohin said.

Eddie Calisto-Tavares wonders what’s going on in three homes in her north Winnipeg neighbourhood where there are licences to grow medical cannabis, according to city electrical permits.

“They have the same three workers going two to three times a day checking on their homes,” she said.

She and others complained to Health Canada, the police and Manitoba Justice and were told the owners have licences to grow and there was nothing anyone could do about it.

We have reported it to Health Canada of the odour. We have e-mailed the so-called inspectors that are in charge of Winnipeg, Saskatoon, Regina, et cetera. No one has gotten back to us,” said Calisto-Tavares.

She suspects the grow-ops may be connected to organized crime because there are often high-end vehicles with B.C. licence plates in the driveway.

$560,000 mortgage on uninhabited home

A woman, convicted of cannabis production and trafficking in 2012, purchased a $373,000 home in Richmond West, a south Winnipeg neighbourhood this past January, and has a $560,000 mortgage with a local credit union, to finance a home no one would reside in.

Her brother told CBC News no one lives in the house and it’s just being used to grow medical cannabis. When asked how his sister got a licence to grow with her criminal record, he said her husband is the licence holder.

Winnipeg police would not do an interview but said it has received “numerous complaints” about cannabis grow operations over “odour, safety concerns and the potential for connection to organized crime.”

They said they have no authority to investigate any legal grows authorized by Health Canada.

Winnipeg city council’s property and planning committee has voted to ask the public service to look at whether the municipality can regulate or ban growing cannabis at home.

Cannabis a lucrative business: police

“They’ve seen an opportunity to make a huge amount of money on this,” said Det. Insp. Jim Walker, deputy director of the Ontario Provincial Police Organized Crime Enforcement Bureau.

He said when cannabis became legal in Canada two years ago, the OPP created a dedicated unit to crack down on the illegal market and police continue to encounter criminals using Health Canada licences to grow.

“We’ve known for a number of years and had seen this regime abused by criminals, organized crime, criminal enterprises … and we continue to see organized crime exploit that,” said Walker.

In October, Walker’s team worked with Winnipeg police to shut down an interprovincial drug trafficking network operation dubbed Project Wonders. Eleven people were charged and police seized cocaine, cannabis, firearms and body armour.

Since July, the OPP says it has dismantled 52 large-scale, sophisticated illegal cannabis production, sale and distribution operations in Ontario and have arrested about 200 people.

There is no maximum amount a patient is allowed to grow under the current Health Canada regulations, and Walker says that is adding to the problem.

“We’re seeing registrations in excess of 400 plants for one individual. You take that now and the regulations allow up to four of those registrations under one address … those individuals will subdivide that lot and now they can even double the amount of plants they have there,” said Walker.

Not a precise science: cannabis expert

A gram of cannabis can produce about four joints, and a plant can produce as much as a pound, or 454 grams of cannabis, said MacKillop.

“So the math becomes enormous pretty quickly,” he said.

Unlike conventional medication, medical cannabis isn’t a precise science, MacKillop said.

“A doctor can’t say, ‘Take this many milligrams an hour before bed and once in the morning.’ It’s much more subjective,” he explained.

He said Health Canada should impose limits on how much cannabis patients can use for medical purposes.

MacKillop also says the practice of a doctor in one province authorizing cannabis for a patient in another province can be problematic.

“I find it personally troubling to hear about a lot of authorizations happening, you know, from B.C. to Manitoba or cross-country, because that, to me, suggests that there isn’t enough involvement in the patient’s health care,” MacKillop said.

“There should be more oversight of the authorization process,” he said.

Lost tax revenue

A former executive of two Canadian cannabis companies says since legalization in 2018, licensed producers now supply about 50 per cent of the legal market.

“We’ve come a long way in two years, but there’s still a huge area to go,” said George Robinson.

He says there will always be an illegal market but it should represent 15 to 20 per cent of cannabis sales, not 50.

Robinson says governments and police need to do more to crack down on illegal growers because that money could be used to help the country get through this pandemic.

“This is a new tax stream that they haven’t really touched in many provinces and now you’re starting to see some of them jump on it, say 80, 100 million, 200 million dollars is a lot of money relative to the times that we’re in right now. Let’s go after those dollars,” said Robinson.

Conservative MP Raquel Dancho says this problem isn’t just in Manitoba, but is happening across the country.

“We’re seeing busts of medical cannabis crops in Alberta and Quebec, in Ontario, sometimes in the tens of millions of dollars of illegal activity that’s going on. So this is a national problem that requires a national solution. So I would put the fault firmly at the feet of the federal Liberal government. They can easily solve this problem.”

Dancho says Health Canada needs to put a limit on cannabis authorizations for medical purposes, and make room for exceptional cases when necessary.

OPP Det. Insp. Walker says the government said it would review legislation three years after legalization. He hopes when they do, they will close the loophole that has allowed organized crime groups, and other criminals exploit the system.

“The simplest thing would be for Health Canada to put a more rigorous screening process in place for the licences that they approved,” he said.

A lack of oversight into who is growing medical cannabis and how much is being grown is allowing criminals to sell pot on the illegal market, according to police and pot activists.

The professionalization of cannabis growing

Brian Owens

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A commercial medical-cannabis cultivation facility in Moncton, Canada. Credit: Organigram Inc.

For years, the popular image of cannabis growers has been scruffy hippies getting high on their own supply in a disorganized underground economy, rather than shiny white industrial agriculture facilities. Even larger-scale operations involved minimal quality control or lacked formal record keeping.

But as legal medical — and increasingly, recreational — cannabis becomes more widespread, the cannabis industry is becoming more professional. By adopting the methods and rigour of plant science and analytical chemistry, it is ensuring that it can produce safe, consistent and high-quality products for a fast-growing and lucrative market.

“As the industry has gotten bigger, they realized they must transition to use modern horticultural science,” says Youbin Zheng, a horticulture researcher at the University of Guelph, Canada, who works with cannabis companies.

Part of Nature Outlook: Cannabis

Although small-scale growers of illicit cannabis can get away with vague descriptions of strains and considerable variation between batches, commercial producers have to meet the same standards as they would for other consumer products. They need to produce a reliable product and follow the stringent rules and regulations that apply to product labelling and safety in their country.

Many of the challenges of large-scale cannabis production can be solved by drawing on the experience of the commercial greenhouse industry, says Zheng. Growing crops commercially requires a homogenous soil and consistent irrigation. Small variations can mean that parts of the crop dry out at different rates, which leads to the spread of pathogenic agents and root rot, and to an inconsistent product. But the tomato industry, for example, has experience of growing tens to hundreds of hectares of produce at a time, and that expertise can be transferred easily to cannabis growers, says Zheng.

“Cannabis is just another crop,” he says. “The commercial flower and vegetable industries have been working on the same problems for many years, and they have the technology already.”

But other issues are unique to cannabis production. And achieving the most efficient production requires growers to do research under controlled conditions to understand how both plant genetics and growing conditions can affect the product.

Zheng’s laboratory is one of many that are working with cannabis producers to support and guide this effort. He is studying how the amount and wavelength of light used in growing can affect the plant’s cannabinoid composition. Increasing the amount of ultraviolet light, for example, can increase levels of tetrahydrocannabinol (THC), the main psychoactive component of cannabis. “We want to create a lighting recipe which will help producers get a consistent product,” he says.

Cannabis companies are quickly adopting techniques and technologies that were pioneered by commercial agriculture and horticulturalists. Organigram, a cannabis producer in Moncton, Canada, stringently controls its growing operations, says Jeff Purcell, vice-president of operations. “The growing environment is standardized, and we have full control over the air, light, temperature and fertilizer,” he says. “It’s all highly automated and computer controlled.”

Organigram’s operation is in stark contrast to the image of an illicit farm hidden in the woods. It is entirely indoors, with 52 identical growing rooms on three floors. Plants are propagated by cloning, rather than grown from seed, so the crop’s genetic identity remains the same from generation to generation. The growers track and log all growing parameters, and then tweak them as needed to maintain consistency. Purcell sees the company’s operation as a ‘manufacturing facility’, rather than a garden or a greenhouse. “There are quality checks like you would see in any manufacturing facility, whether it was producing food or tyres,” he says.

The large-scale, controlled environment enables Organigram to conduct systematic, controlled trials and to produce huge amounts of data — with 5 cycles of growth per year in each of the growing rooms, it can generate more than 250 generations’ worth of growing data each year, says Purcell. The company can use those data to determine what works best for the plants, and then replicate those conditions at scale. “That’s the big difference with the black market,” he says. “When you scale up, you have to take a data-driven approach.”

To run these advanced facilities, cannabis companies need researchers who are experienced in plant science, microbiology, chemistry and other scientific disciplines — and they are turning to academia to find them. “Instead of underground growers, they are hiring lots of university-educated and trained people,” says Zheng.

A student inspects a cannabis plant at Niagara College Canada’s teaching laboratory in Niagara-on-the-Lake, Canada. Credit: Niagara College

Many of his postgraduate students, he says, receive job offers from cannabis companies before they have even completed their studies. Zheng will begin teaching a cannabis production class for undergraduates at the University of Guelph in January 2020, and several colleges in North America already offer courses designed to provide skilled workers to the industry. In April, the first 24 students graduated from an 8-month cannabis production course at Niagara College Canada in Niagara-on-the-Lake. That course, intended for students who already have a diploma or degree in plant science, focuses on how to grow cannabis and the surrounding regulations. Bill MacDonald, a plant scientist and the programme’s coordinator, says that the graduates were snapped up by industry.

Testing, testing

Besides the challenges of growing a sufficient amount of high-quality cannabis for a rapidly growing market, cannabis companies have to deal with something that illegal growers do not — government regulation.

“For a product to be sold in most US states, it has to be tested externally,” says Jahan Marcu, director of experimental pharmacology and behavioral research at the International Research Center on Cannabis and Mental Health in New York City.

In Canada, government regulations require producers to use an independent lab to measure the level of cannabinoid in dried cannabis flowers and oils so that the resulting products can be labelled appropriately. Producers must also test for contaminants such as the bacterium Escherichia coli, mould, heavy metals and 96 types of pesticide. When edible cannabis products become legal in Canada later this year, they will face similarly stringent rules, says Purcell; labels on such products will have to convey the same nutritional information as do those on any other food product. In the United States, the regulations are broadly similar to those in Canada. But each US state where medical or recreational cannabis is legal sets its own testing regime — and those requirements can vary widely and change quickly. “In Delaware, the regulations are now totally different than two years ago,” says Marcu.

Independent testing labs have sprung up to help growers to meet the requirements, but like the wider cannabis industry, they face growing pains. “At the moment it’s a bit like the Wild West, with different rules in different places,” says Andrew James, marketing director of Ellutia in Ely, UK, which makes chemical analysis equipment for the cannabis industry, among other markets. “It can be hard to know what to test for, how to test and where to do it.”

In the United Kingdom, for example, strict rules concerning THC levels in medical cannabis mean that labs can find it difficult to get the sample analytical standards that they need for comparing products. The licences required to handle the standards are the same as those needed by a lab doing research on the drug itself. “It’s ludicrous that analytical standards are so tightly controlled,” says James. “The cannabis products are treated the same as a kilo of cocaine.”

And not all analytical labs are up to the job. Roger Brauninger, biosafety programme manager at the American Association for Laboratory Accreditation (A2LA), a non-profit organization in Frederick, Maryland, says that although US states introduced requirements for external testing as medical or recreational cannabis became legalized, there was rarely any infrastructure or expertise in place to facilitate a professional testing regime. Even the most established labs, located in California, have only been around since the mid-2000s — despite the state legalizing the medical use of cannabis in 1996.

“Because of the federal strictures, there weren’t any standardized methods. Labs had to validate everything themselves,” Brauninger says. “It’s difficult to bring in expertise when there isn’t a wealth of information available, and no trade association to help share techniques.”

That led to labs being set up quickly with old equipment in unsuitable spaces, and with minimal quality control. James says that, in the past, it was not uncommon to meet people at trade shows who had bought analytical kits on the online auction site eBay and were running testing labs from their bedrooms.

Cannabis analytical labs are becoming more professional. “I’ve seen an evolution in the sophistication of the industry,” Brauninger says. “Most of the people running labs now have PhDs and experience in the pharmaceutical industry. It’s light years more sophisticated than five or six years ago.”

Such labs are beginning to adopt standardized tests for potency and purity using gas chromatography and high-performance liquid chromatography. They are also developing methods to identify and measure levels of THC and other cannabinoids, as well as contaminants such as heavy metals and pesticide residues. “These aren’t necessarily new tests that have been created for this industry, but the type that had to be applied for this product,” says Brauninger.

A2LA is also helping labs to attain ISO/IEC 17025 accreditation, the main international standard for testing and calibration labs. It covers all phases of lab operation, including staff training, data protection and dealing with conflicts of interest.

More from Nature Outlooks

Although many small-scale cannabis growers at first questioned the need for intensive product testing, most can now appreciate the benefits that the rules bring to the market. “People see the need for quality control and testing,” says James. “It brings a legitimacy to the industry that hasn’t always been there.”

And as testing becomes more widespread, its importance is also reaching users, says Marcu. “Consumers are starting to realize that there is a big difference between illicit or grey-market products and those from a licensed operator,” he says. “They can have more confidence in the products than before.”

One sign of progress is that cannabis products can be recalled when they fail testing, just like other medical or consumer items. In December 2016 and January 2017, Organigram had to recall some of its products when residues from pesticides not approved for use in cannabis were detected. Although the company’s reputation took a short-term hit, Purcell says that recalls are a sign of the industry’s growing professionalism. Consumers can be confident that cannabis goods have been made “under a controlled, regulated environment and tested in a certified lab that guarantees safety and quality”.

As the cannabis industry expands, the role of good science within it will also expand, and there will be further opportunities for collaboration. “More and more,” says Zheng, “the scientific community and industry are directly communicating and sharing information.”

Nature 572, S10-S11 (2019)

This article is part of Nature Outlook: Cannabis, an editorially independent supplement produced with the financial support of third parties. About this content.

As the wave of legalization advances, a budding industry is adopting the high standards of consumer-product makers to meet regulatory requirements.