In Canada, people associated with the Mafia and drug dealers are issued cannabis licences according to CBC News Report

By Christine Duhaime | November 4th, 2018

According to a news story in French on CBC News, the government of Canada has issued licences to a cannabis company that has ties to the Mafia, and to major drug traffickers and Canada has also issued another licence to a cannabis company whose shareholders include major drug traffickers.

The journalist in the story notes that the Canadian government vetted and approved criminal elements when issuing licences when the documentation submitted was transparent (meaning the ties to a TCO were available for discovery on a routine due diligence). According to the story, all that the government does in terms of an investigation and due diligence to issue a licence to a cannabis company in Canada is conduct a litigation search and a criminal record search of a company applying.

According to the news story, the investigation work undertaken by the Government of Canada does not include a review of corporate entities (e.g., shareholders, offices, directors) or beneficial ownership. It does not include a search as against sanctions lists or terrorists lists either.

According to the story, the reason a proper due diligence on cannabis licence holders is not completed is because it involves ‘too much investment, too much time, too much money.’

Bottom line? Unfortunately, it may mean that in Canada, if you are a bank, you will not be able to place any weight on the fact that a cannabis company was granted a licence from Canada given that associates of the Mafia can obtain a licence and that means that all cannabis license holders pose a reputational, criminal and money laundering risk to a financial institution.

The CBC report declined to name those cannabis licence holders associated with TCOs.

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