CEN Biotech withdraws court challenge against Health Canada

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CEN Biotech, a company that sought to open the world's largest medical marijuana facility in southern Ontario, has withdrawn its bid to challenge Health Canada in court.

The company asked for a judicial review after Health Canada informed CEN Biotech in February that its application for a licence was being rejected.

The move came after a series of concerns emerged about the company's conduct; including numerous different signatures attributed to its chief executive officer in regulatory documents; claims by CEN that it had ties to the Health Minister, which the Minister then disputed; and revelations that the company had invented the identity of an employee.

Health Canada issued a formal rejection of the company's licence on March 11. In a letter filed with the courts on Friday, CEN Biotech said it would not proceed with its application for a judicial review, and issued a notice of discontinuance, which was accepted by Health Canada.

Though some investors speculated on Friday that the withdrawal of the court challenge suggested the two sides might have reached a settlement, the government said that was never on the table.

"The judicial review application was withdrawn by CEN Biotech," a Health Canada spokesperson said in an e-mailed statement to The Globe and Mail.

"There was no settlement. The decision not to grant a license to CEN Biotech was not a negotiation, it was made by Health Canada Officials."

The move brings to a close CEN Biotech's efforts to secure a licence in Canada's recently privatized medical marijuana sector.

CEN's conduct came under scrutiny as the value of its shares soared last year amid false claims by the company that it had been licenced, or was on the verge of being licenced. CEN also told investors that it was partnering with Health Canada, which the department said was not true.

Many of those claims helped push up the stock price of CEN Biotech's parent company. At its height last year, the company was worth more than $350-million (U.S.) However, while such claims were being made to investors, CEN Biotech's CEO, Bill Chaaban, was selling off millions of shares at a significant profit.

CEN is the Canadian subsidiary of Creative Edge Nutrition, a Michigan-based nutritional supplements company that is traded as a penny stock on the loosely regulated over-the-counter (OTC) market in the United States.

This week, the Ontario Securities Commission said it is investigating the company, but did not comment further on its probe.

Mr. Chaaban could not be reached for comment Friday.