CEN Biotech’s efforts  to open the world’s biggest  medical cannabis compound in Canada is being denied by the federal government.

Amid serious questions about the company’s behavior, involving assumptions of misrepresentation and false claims by the CEO, Health Canada told CEN Biotech in a statement late Friday that the government intends to deny its application for a license.

“Based on a thorough assessment in line with the extensive requirements built into the Medical Marijuana Program, Health Canada has advised CEN Biotech of its intent to reject its application,” Health Canada spokesman Stéphane Shank announced in a statement to The Globe and Mail. The transition comes after a Globe and Mail investigation outlined a series of misrepresentations by the company to investors and regulators. These involve claims to shareholders that the company had been licensed, or was on the brink of becoming licensed, by Health Canada, when it was not. Those claims helped overwhelmingly to drive up the stock price of CEN’s parent company, Creative Edge Nutrition Inc. However, the CEO was silently selling large quantities of shares at a substantial profitable gain. Other errors have come to surface in recent weeks, including confirmed allegations  that the company invented an employee named Isak Weber to act as a spokesman to dispute the discovery of The Globe’s investigation. After it was made clear that Mr. Weber did not exist, the company’s CEO Bill Chaaban anounced the name was a “nom de plume” for an employee named Roger Glasel.

Mr. Chaaban did not release why Mr. Glasel wouldn’t use his real name in a press release delivered to the financial markets, and compared the matter to companies using mascots, such as Ronald McDonald and Mr. Clean.

The company then attracted attention in Ottawa when it surfaced that CEN executives were convinced  Mr. Glasel had connection to Health Minister Rona Ambrose. That forced Ms. Ambrose’s office to take the peculiar step of delivering a statement that said she did not know Mr. Glasel and “is disturbed by the allegation he is using her name without her permission or knowledge.” However, the emergence of documents filed with regulators that show various different signatures contributed to Mr. Chaaban raised further questions about the company. in reply, Mr. Chaaban stated it did not matter how he signed his name and that he could sign  his name with his feet if he wanted. But amid these mounting issues, Health Canada decided on Jan. 30 to have the RCMP review the company’s licence application.

“Health Canada has in place a rigorous screening process,” Mr. Shank’s statement said. “This helps ensure that the operations of Licenced Producers do not pose a safety or security risk to Canadians and to the local communities in which they are set up.”

CEN Biotech has 20 days to reply to Health Canada’s rejection letter. Once 20 days has passed, the rejection becomes final “unless the company successfully provides a response that causes Health Canada to change its intent,” Mr. Shank stated.Mr. Chaaban sent an e-mail on Friday night he was not aware of any contact from Health Canada. Yet, Mr. Shank anounced the company “was informed in writing” on Friday.Given the issues accruing with CEN Biotech in recent months, the rejection letter seems to deliver a message to the nascent industry that Health Canada wont license applicants that do not behave themselves in a professional manner. The privatized medical cannabis sector was opened April 1, and is being structured under orders from the Supreme Court of Canada.

CEN Biotech sent and application to cultivate 600,000 kilograms of medical marijuana, making it the biggest applicant under the federal program. Thus far, the government has licensed 15 businesses. More than 1,200 have filled out and set applictions, and more than 500 have been rejected.

“The screening process has been designed with stringent criteria. It will continue to be scrupulously applied to all applicants,” Mr. Shank stated.

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