Canadian Govt: No Mafia in Legal Cannabis Trade
Internal memos circulated among federal officials in Canada reveal that the government continues to doubt the infiltration of organized crime networks into the legal cannabis industry despite investigations that have found shady money in legal marijuana enterprises, local media reported.
A report published early this month by Enquete (Inquiry), a French-language investigative television series of Radio-Canada, alleged that Health Canada, the country’s national public health service, has granted marijuana production licenses to companies employing individuals linked to organized crime.
The February memos, disclosed through the Access to Information Act, track correspondence among nine federal agencies that seems to suggest officials seem confident that existing procedures to identify dirty money are sufficient enough.
“The potential for organized crime to invest in the legal cannabis market through offshore tax havens exists, but does not appear fundamentally different from the potential for such investments in any and all sectors of the economy,” says a memo to the Public Safety Canada deputy minister.
There does not appear to be any “strong pull factors” for organized crime to penetrate the legal cannabis industry, that memo concluded.
In an effort to curb the illegal marijuana trade, President Justin Trudeau’s government legalized its recreational use last month, becoming the world’s first major economy to do so.
One investor in a major Canadian cannabis company has links with a prominent member of the Rizzutos, the powerful Montreal crime family, according to Enquete’s investigation. Another is known to have had business dealings with influential Mafia members and drug traffickers.
Health Canada insists it has not identified any cases of organized crime infiltration into its more than 130 licensed cannabis producers since 2013. Medical marijuana has been legal in Canada since 2001.
Organized Crime Reduction Minister Bill Blair agrees that the trade is clean, saying he has not seen any evidence of penetration. The current regulations “provide for significant financial transparency,” he said.
He added that he was “very confident” that Health Canada and the Royal Canadian Mounted Police, the federal police force, will work together to “protect Canadians.”
Some politicians are not so sure. Tory Senator Claude Carignan thinks the government is being “a little bit naive on the issue” of criminal involvement. Many members of the Conservative Party, known as the Tories, were strongly against cannabis legalization. One politician went so far as to read an anti-cannabis poem of her own composition before a Senate hearing.
Exacerbating the struggle for transparency is the fact that many cannabis companies are funded through family trusts, which Marie-Pierre Allard, who studies tax policy at the Universite de Sherbrooke in Quebec, says provide a perfect hiding place for those with business interests.
“The beneficiaries of the trust are not disclosed publicly. It’s anonymous,” Allard said.
The structure of these trusts, she says, are “one of the great vulnerabilities of the Canadian legal system.”