Nfld. & Labrador

Tories want auditor general to scrutinize $40M Canopy Growth contract

PC Leader Ches Crosbie announced Thursday he's writing to the auditor general to look into the province's contract with the cannabis company.

Opposition wants auditor general to examine fair competition, lobbying practices

A government contract with one of the province's two cannabis producers could be formally investigated if the Opposition has its way. (Chris Wattie/Reuters)

If the Liberals won't ask the auditor general to investigate Canopy Growth's contract, says PC Leader Ches Crosbie, he will.

Crosbie has focused his question period inquiries in recent weeks on the Canopy deal, which offered the company $40 million in remittances if the cannabis producer lives up to its contract.

That contract, plus the unknown ownership of a numbered company from which Canopy rents land for their production facility, prompted Crosbie to say he plans to ask the auditor general to review the deal.

"We believe this is a matter of significant public interest, and taxpayers have a right to know why this company was picked, how it was picked, who is benefiting and whether taxpayers are receiving fair value for their investment." Crosbie said in a release.

Ches Crosbie has spent the last few weeks asking for a Liberal-led probe into who's behind the numbered company leasing land to Canopy. (Danny Arsenault/CBC)

The Opposition hopes to find out whether lobbying rules were breached and whether the Liberals followed a competitive process in selecting Canopy for the job.

The PCs are also questioning Canopy's relationship with the landlord of its production facility is also under question, and say they want to ensure nobody benefited due to personal or business relationships with the Liberal party.

'We're not hiding anything'

During Thursday's question period, Crosbie asked why smaller producers such as Corner Brook's BeeHighve didn't receive similar contracts.

"BeeHighve received their Health Canada licence without any government handout," Crosbie said. "Why have you chosen to shovel money into Canopy Growth and a secret shareholder company while BeeHighve can succeed on its own?"

Christopher Mitchelmore, industry and innovation minister, responded that Canopy and Biome Grow were best suited to supplying the province in the runup to legalization.

"If we had not entered into a supply agreement, we would not have 23 retailers that are selling, and have sold, millions of dollars of cannabis here in this province," Mitchelmore said.

Jeff Ryan, left, a Canopy Growth vice-president, and Industry Minister Christopher Mitchelmore break ground on the site of the company's future production facility in the White Hills area of St. John's. (Terry Roberts/CBC)

BeeHighve did not have a sales licence at the time of legalization, he added, defending the contracts with Canopy and Biome, which he said the province made in order to "grow an industry" in the long-term.

"That's exactly what we're doing," Mitchelmore said.

"We're not hiding anything."

Mitchelmore said a monthly auditing process is already in place to keep an eye on Canopy and calculate sales and payments to the company.

The contract allows the province, through the Newfoundland and Labrador Liquor Corporation, to revoke Canopy's sales licence if it finds it is not sticking to the agreed terms, he said.

Auditor 'welcome' to investigate

When Crosbie asked whether the Liberals would request an investigation, Mitchelmore would not directly answer Crosbie's question, prompting the PC leader to commit Thursday afternoon to requesting the audit himself.

Speaking to reporters, Mitchelmore again avoided direct questions, but said Julia Mullaley, the province's auditor general, was welcome to launch an investigation.

"If the auditor general wishes to do so, she's certainly more than welcome to," he said, adding that the infant industry wouldn't have many records on file to audit.

"It would be very early and very preliminary to be able to do a performance-based audit," he said. 

Moreover, he added, Mullaley may not have the ability to answer Crosbie's questions.

 "[This is] a private business-to-business matter, which would be outside the purview and scope of what the auditor general could conduct."

With files from Katie Breen

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