David George-Cosh

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Health Canada changed the way it conducted cannabis industry inspections last year amid an “insatiable appetite” for licences, according to one of CannTrust Holdings Inc.’s former top executives, in a move that potentially opened the door for the regulatory fiasco that has thrust the pot producer into the spotlight.

Brad Rogers, the former president of CannTrust who worked at the Vaughan, Ont.-based company from April 2016 to last October, told BNN Bloomberg that he observed a streamlining for licence submissions after Health Canada was flooded with applications before Canada legalized recreational cannabis in October.

“It got to a point where there was an insatiable appetite for licences. Everybody was going to get into the cannabis industry and Health Canada was inundated with licence applications,” said Rogers, who is currently chief executive officer of U.S. cannabis operator Red White & Bloom. 

“To get through the process, I think they tried to streamline it by accepting an evidence package. You would send pictures of your facility, security screenshots and they vetted it remotely and came in for a physical inspection later.”

Spokespeople from Health Canada and CannTrust weren’t immediately available to comment on his statement.

Rogers’ comments come in the wake of a whistleblower’s allegations that CannTrust employees installed fake walls in the company’s Pelham, Ont. facility to hide cannabis grown in unlicensed rooms. That claim emerged days after CannTrust disclosed it received a non-compliant order from Health Canada after the regulator conducted an audit at the pot producer’s facilities, later leading the company to suspend all sales of cannabis products and causing its stock to plunge nearly 50 per cent in the span of a week.

Rogers stated it was an “absolute surprise” when he first heard about CannTrust’s disclosure last week. “General shock is the word for me,” he added.

Rogers said that during his tenure, CannTrust employees prepared its facilities for a physical, in-person inspection where “all the pieces were in place for Health Canada to approve the room to get a cultivation [licence].”

“As I was leaving, [Health Canada] actually changed the system,” he said. “They went to an online system, which to some degree was arduous.”

Peter Aceto, CannTrust’s CEO, told BNN Bloomberg in a phone interview Monday that the company's independent board committee should deliver a report on how the company grew thousands of kilograms of cannabis in unlicensed rooms within the next month. CannTrust retained a third-party firm to conduct a "root cause analysis" which will provide a "clear view" on the series of events that led to the unlicensed production taking place between last October and March, Aceto said. 

Rogers told BNN Bloomberg he retained most of the shares that he was allotted when he began working for CannTrust and believes if regulators were to revoke the company’s production licence, it “would really be a shame.” 

“I think the company has great bones and great people. How Health Canada handles it will be up to them but it would be a shame to shut that company down or do anything punitive to the people who really care about the business and doing great work there,” he said.