CannTrust CEO was warned over illicit pot growing: former compliance worker | 24CA News

A former director of high quality and compliance at CannTrust Holdings Inc. says he warned the corporate’s chief government that Health Canada may levy penalties if the agency grew pot in unlicensed rooms at its Niagara, Ont. facility.

In the months main as much as Health Canada discovering pot rising in unlicensed rooms, Graham Lee stated Tuesday that he informed Peter Aceto he couldn’t say what the precise penalties might be, however knew the federal government regulator had beforehand issued warning letters and handed out penalties.

For instance, Lee stated Health Canada reviewed CannTrust’s stock extra extensively after it found the corporate utilizing a storage facility at its Vaughan, Ont. location opposite to licensing.

“In general, Health Canada was there every day checking up on the inventory,” Lee recalled.

Though he warned Aceto about penalties, Lee stated he didn’t give him recommendation about whether or not to reveal alleged unlicensed rising to the general public or Health Canada. Lee, who was employed by CannTrust in 2017, additionally didn’t report it to the general public or Health Canada as a result of he didn’t take into account it his job.

His feedback have been made on the Old City Hall courthouse in Toronto in response to questioning from Dihim Emami, a lawyer representing the Ontario Securities Commission (OSC) in a case aiming to show Aceto and different former CannTrust executives are responsible of a number of offences associated to unlicensed rising on the Niagara facility.

Aceto, former CannTrust chairman Eric Paul and former vice-chairman Mark Litwin have pleaded not responsible to fraud and authorizing, allowing or acquiescing within the fee of an offence.

Litwin and Paul are additionally going through insider buying and selling costs, and Litwin and Aceto are charged with making a false prospectus and false preliminary prospectus.

The OSC and Royal Canadian Mounted Police allege Litwin, Aceto and Paul didn’t confide in buyers that about 50 per cent of the rising house at CannTrust’s Pelham, Ont. facility within the Niagara space was not licensed by Health Canada. They say the lads used company disclosures to say that they have been compliant with regulatory approvals.

They additionally allege that Litwin and Aceto signed off on prospectuses used to boost cash within the U.S., which acknowledged that CannTrust was totally licensed and compliant with regulatory necessities, and that Litwin and Paul traded shares of CannTrust whereas in possession of fabric, undisclosed info relating to the unlicensed rising.

The males now not work for CannTrust and their attorneys are arguing their shoppers are all harmless.

Frank Addario, Aceto’s lawyer, beforehand informed The Canadian Press his consumer was employed due to his monetary acumen and observe document. Before his time at CannTrust, Aceto was the president and chief government of ING Direct Canada.

Addario additionally identified that CannTrust was topic to inspections and monetary audits that uncovered no materials points.

“The evidence will show Peter Aceto behaved legally and with integrity during his time at CannTrust,” Addario stated in an e-mail.

However, Lee testified Monday that the expansion of hashish in unlicensed rooms was “very openly discussed” on the pot firm.

“There was no hiding this. There was no denial of this,” he stated.

On Tuesday, he bolstered these allegations, describing how he introduced up his considerations about unlicensed exercise throughout at the least one assembly in February 2019 that he recalled Aceto attended.

“I noticed that no one in the room was referring to or cognizant of the fact that these were unlicensed areas, so I reminded them,” Lee stated.

Later that 12 months, in the summertime, he stated Nick Lalonde, a former CannTrust worker who Lee heard was terminated for efficiency points, messaged him on LinkedIn asking if Health Canada could be OK with among the firm’s practices, together with unlicensed rising.

“You may reply if you like or I can ask Health Canada myself” Lee stated Lalonde wrote.

Lee didn’t reply to the message, however stated he wasn’t significantly involved

“I had a pretty fatalistic approach at this point. It is what it is,” he informed the courtroom. “Lalonde is going to say what he is going to say and we will deal with the consequences.”

Health Canada later visited the ability. Lee deduced it was due to Lalonde as a result of the regulator’s questions mirrored the problems raised in his message to Lee.

By August, Lee was terminated and he surmised it was due to his information of unlicensed rising alongside along with his communications with Health Canada.

Lee, who nonetheless had 5,000 shares within the firm, felt “not happy but not surprised.”

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