Nova Scotia-based Canadian cannabis advocate Chris Enns has been targeted by the Canada Revenue Agency (CRA) audit, which claims that Enns didn’t report $2.5 million in taxes from illegal cannabis-related income. These numbers come from decade-old data between 2012-2014.

According to CBC.ca, Enns is described as being at “the forefront of the medical marijuana movement in Halifax,” and well-known for his advocacy efforts. He told the news outlet he is being targeted by the CRA unfairly, claims that the CRA’s numbers and data are inaccurate, and that he has no unreported sales.

In March 2023, the CRA created an Illicit Income Audit Program to counter both money laundering and other illegal activity conducted by organized crime groups. CBC.ca reports that the program includes 80 auditors to target illegal businesses. Between April 2023-August 2023, the CRA shared that 90 audits were labeled as complete, with a total of $74 million discovered in unreported income, as well as $24 million taxes owed and $7 million penalties issued.

The CRA describes Enns’ case as “unique,” and the Tax Court of Canada claims that Enns “deliberately structures his finances so that the government cannot determine the taxable income of his businesses and himself.”

The Minister of National Revenue initially confirmed a tax reassessment, which showed that $2.5 million was allegedly missing and unreported from between 2012-2014. Additionally, $654,000 in “gross negligence” penalties were issued to Enns. Enns appealed the decision two years ago, but there is currently no appeal date.

The case targets Enns and 59147 Nova Scotia Ltd., which controls operations for the Grow Shop, an industrial park in Dartmouth, Nova Scotia. The business primarily sells gardening supplies and hydroponic equipment, while a different business that Enns owns is the Halifax Compassionate Club (a non-profit dispensary), as well as the Farm Assists Cannabis Resource Centre.

The CRA alleges that the Halifax Compassionate Club never filed any tax returns or any other documents required by non-profit businesses. Additionally, it claims that because Enns manages all businesses through “59147 Nova Scotia Ltd.,” the records are “unreliable.” “Enns attempted to structure his business affairs so that expenses are claimed, but revenue sources are either not reported or under-reported,” a government statement said in reply to Enns’ appeal.

CBC.ca believes that Enns’ is being targeted because he was arrested on trafficking charges when police raided his cannabis businesses in 2013 and 2014. According to Illicit Income Audit Program director general, Eric Ferron, auditors often use “indirect verification methods” to come up with income data. This includes analyzing bank and credit card records, and various assets (ex. a luxury vehicle) to determine evidence of business income through illegal methods. The CRA has the ability to seize future wages and assets, and also put a lien on a property. “It is difficult, but it is the right thing to do,” Ferron said. “At the end of the day, we want to promote tax fairness, and we also want to disrupt illicit financial flows. People shouldn’t profit from illegal activity, and people should pay their fair share of taxes.”

In the past, Enns has fought for medical cannabis patients access to medicine and improved legislation to protect and serve patients. As a result, his record includes numerous arrests for cannabis-related offenses. Enns told CBC.ca that the “many criminal proceedings” he has endured have made record-keeping difficult, but he’s working on updating all of his records. Additionally, he shared that his only asset is a 13-year-old Honda Civic. “The CRA is basing its assertions on documents that were developed in the process of a criminal prosecution that was withdrawn by the Crown,” said Enns. “Not only were the numbers in the document artificially generated, but the document itself is being used improperly by the CRA.”

According to CBC.ca, the CRA has used such methods to target illegal activity for almost 100 years. One example from 1926 shows the U.K. Judicial Committee of the Privy Council ruled that an Ontario “garage owner” was trafficking liquor and was forced to pay income tax on illegal sales.
In 2019, Enns’ dispensaries were raided by law enforcement, who seized 50 pounds of cannabis, numerous kilograms of extracts, edibles, and also cash. Later in October 2021, Enns defended himself in front of Judge Elizabeth Buckle, claiming that his rights were violated. In an interview with SaltWire Network on the same day, Enns explained his defense and the case’s conclusion. “Well, for the purposes of the application that was before the court today, it was a simple and straightforward section, a challenge where I made an argument that the actual information that was contained in the affidavit that the police used in order to go before a justice of the peace and request a warrant to search the business locations, was simply not sufficient, and did not contain any credible evidence that a justice of the peace could reasonably have used in order to justify the issuance of that warrant,” Enns said in the interview. The judge ruled that law enforcement cannot use online resources such as Weedmaps to justify a search warrant, and the case ended.

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An audit on the Massachusetts cannabis industry recently revealed that the Massachusetts Cannabis Control Commission (CCC) allowed millions in possibly unsafe cannabis products to be sold to consumers.

The audit report was published on Sept. 26 by state auditor Diana DiZoglio, with the goal of finding if the CCC was following state regulations for recreational cannabis products. The results included data from between Jan. 1, 2019 and Dec. 31, 2020, the report stated that $10,192,986 in cannabis products were sold to consumers. Many of the products were sold over one year after they were lab tested, well after the products were considered to be expired and would need to be retested for safety purposes.

Three primary findings were recorded in the audit summary: First, that the CCC “did not identify all products considered expired and prevent their sale to consumers before they were retested. Second, that it “did not ensure that marijuana establishments (MEs) and independent testing laboratories (ITLs) properly reported marijuana products that tested positive for pesticides.” And finally, the audit revealed that its employees haven’t received cyber security awareness training.

State law requires labs to report positive pesticide results within 72 hours, but the report explained that the CCC did not follow this rule. In one isolated example, one independent testing facility did not notify the CCC of a positive test result at all.

In a press release, the office of the state auditor recommended that the CCC “improve its processes and procedures, and based on their response to our audit, the CCC is taking appropriate measures to address the concerns noted in this area.”

A statement from DiZoglio explained that the CCC is already making plans for improvement. “According to the Commission’s responses, based on our audit findings, they are taking steps to implement changes and improve policies and procedures to reflect most of our recommendations,” DiZoglio said. “I appreciate the willingness to comply with our audit team and will be following up in the near future.”

Recently, CCC chairwoman Shannon O’Brien announced in July that executive director Shawn Collins would be stepping down from his position to take parental leave. O’Brien described the move as putting the CCC “in crisis.” She later apologized for the “angst” or “confusion” in her original statement.

Collins is the only CCC executive director that has been appointed so far. However, as of September, he confirmed that he has no “definitive plans” to leave. “I remain the executive director as of today,” he told the 22 News earlier in September. “It’s certainly a job that I enjoy quite a bit. It’s a very stimulating job, a lot of novel issues, the issues continue to evolve on a pretty regular basis. So something I still get a lot of energy from.”

For now, he is planning to continue in his role. “So I don’t know what the future holds for me, certainly, but I’m looking forward to clocking in on a daily basis and continuing to do the work alongside the folks that are here at the agency,” Collins said. “So that status hasn’t changed. I remain the executive director and have not resigned.”

When interviewed about leaving the CCC by the end of 2023, he commented that a succession plan for the CCC is necessary. “That would be something I’d want to talk about with the commission as a whole. Again, I think making sure there’s a plan in place for that succession is important. It’s something that commissioners have raised in public meetings throughout the last year,” Collins added. “At this point, there is no concrete plan for the end of the year.”

Massachusetts voters approved recreational cannabis in November 2016 with Question 4, and legal cultivation and possession began in December 2016. Sales took a bit longer to develop, and finally began in November 2018. Since then, cumulative cannabis sales have risen overall, as seen in the most recent sales data. As of Sept. 6, the CCC stated that Massachusetts has collected more than $5 million in gross cannabis sales. “Massachusetts continues to hit record sales even as other states have come online. In fact, our neighboring states Maine, Rhode Island, and Connecticut also had record sales this summer,” said Collins. “Demand for tested, quality cannabis products remains strong in the region, and consumers shopping in other states have not impacted Massachusetts’ success.”

According to Metrc, Massachusetts is home to “317 retailers, nine delivery couriers, eight delivery operators, [and] one microbusiness.” As of January this year, the CCC has approved licenses for 53 retail stores and four delivery operators.

Over the past five years, 16 cannabis companies either surrendered their licenses, let them expire, or had them revoked. “I would say, from a competitive standpoint, I would expect that to happen. It happens in all industries,” Collins said. “Is there a saturation point in certain areas of Massachusetts versus the entire commonwealth? Product competition and competition for shelf space. You know, at first it was, ‘what can I get my hands on?’ and now you’re starting to see some brands emerge.”

As of September 14, O’Brien was suddenly suspended from her role as CCC chair, having occupied the position for slightly more than a year. The decision was made by Massachusetts state treasurer Deborah Goldberg, but a reason has not yet been provided to news sources.

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