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Personal marijuana grow-ops emerging as targets for organized crime, Globe investigation finds

GLOBE INVESTIGATION

Personal marijuana grow-ops emerging as targets for organized crime, Globe investigation finds

An increasing number of individual medical marijuana patients are using a licensing system to grow hundreds of plants, a Globe investigation reveals. Molly Hayes and Greg McArthur report on a shadow market susceptible to robberies and abuse

A satellite image of the Muileboom family’s Niagara region farmhouse. Peter Muileboom was charged with unlawful production of marijuana. His case remains before the court.

The proliferation of personal yet industrial-scale marijuana farms, licensed and shielded by health privacy laws, has created a shadow market in which individual patients are collectively churning out as much marijuana as some commercial producers – with none of the scrutiny.

Although they operate under the guise of legitimacy, a Globe and Mail investigation has found that these personal grow-ops are prime targets for robberies and abuse by organized crime.

As the federal government edges closer to scrapping Canada's long-standing prohibition against the sale of recreational marijuana, the country's two-tiered medical marijuana regime serves as a major obstacle to one of Ottawa's frequently stated legalization goals: the elimination of gangsters from a legal marketplace.

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At one end of the medical marijuana spectrum is what Health Canada calls its licensed producers (LPs), the 76 commercial growers who harvest their product in heavily guarded and regularly inspected commercial facilities, where every gram is accounted for and shipped directly to customers via mail order. These companies have websites, publicized addresses and identifiable executive teams.

At the other end is a licensing system that allows individual patients to grow for their personal use or designate someone to grow on their behalf. Thousands of these personal or designated-grower licences have been issued in the past year alone under the federal Access to Cannabis for Medical Purposes Regulations.

Among them, according to records recently released under the Access to Information Act, are some 600 "supergrowers," people who have somehow obtained prescriptions permitting them to have on hand, at any time, at least 244 plants and 35 kilograms of dried bud – far more than any individual patient could feasibly ingest. (The average patient consumes less than three grams a day, which, according to Health Canada's calculator, would allow them to possess 10 plants and 450 g of dried bud.)

Anne McLellan, chair of Ottawa's legalization task force and a senior adviser with law firm Bennett Jones LLP, says it is "incumbent" on the government to make changes to this personal licensing system if it is serious about cutting out organized crime.

"If one of your key objectives is to limit diversion into the illegal marketplace, then you do have to look at the medicinal stream and see what is happening there, because you cannot let that undermine one of your primary public policy objectives," Ms. McLellan said.

Owing to the patchwork nature of Canada's medical marijuana laws – which have undergone two makeovers since 2014 – Health Canada cannot say exactly how many personal grow-ops exist. It acknowledges there could be as many as 28,000 personal or designated operations actively, and legally, harvesting millions of plants under old, grandfathered licences. But the department does not know, because it stopped keeping records for such grow-ops when the regulations first changed in 2014.

But the bulk of the current regime's aforementioned supergrowers – 408 – are located in Ontario, according to the records recently released by Health Canada – three times the number in British Columbia. Still, Health Canada will not provide street addresses or postal codes of these operations – not even the cities or regions in which they are based.

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Collectively, these supergrowers, which account for roughly 8 per cent of all licensed personal or designated growers, are able to produce a minimum of 140,000 plants at a time .

Over the past three years, these large-scale, "personal" cultivation facilities – operating with no transparency about who owns them and no accountability about who ultimately consumes their product – have spread across rural Canada. They have also become magnets for theft and violence.

1

A designated medical marijuana grower can grow for two people at a time. If each person has a 244-plant license, the grower can grow 488 plants.

2

Each address can have two designated growers (or four licenses total). Two growers licensed to grow 488 plants each will now have 976 plants at one address.

3

An address can have multiple “units.” So two growers can apply to Health Canada to grow their collective 976 plants at 123 Pot Street Unit B, totaling 1,952 legal plants at that address.

123 Pot St.

Unit A

123 Pot St.

Unit B

1,952 plants

3

1

Designated

growers

976

976

2

488

488

488

488

244

244

244

244

244

244

244

244

1 plant = 30.5 plants

MURAT YÜKSELIR / THE GLOBE AND MAIL

1

A designated medical marijuana grower can grow for two people at a time. If each person has a 244-plant license, the grower can grow 488 plants.

2

Each address can have two designated growers (or four licenses total). Two growers licensed to grow 488 plants each will now have 976 plants at one address.

3

An address can have multiple “units.” So two growers can apply to Health Canada to grow their collective 976 plants at 123 Pot Street Unit B, totaling 1,952 legal plants at that address.

123 Pot St.

Unit A

123 Pot St.

Unit B

1,952 plants

3

1

Designated

growers

976

976

2

488

488

488

488

244

244

244

244

244

244

244

244

1 plant = 30.5 plants

MURAT YÜKSELIR / THE GLOBE AND MAIL

An address can have multiple “units.” So two growers can apply to Health Canada to grow their collective 976 plants at 123 Pot Street Unit B, totaling 1,952 legal plants at that address.

1

2

3

Each address can have two designated growers (or four licenses total). Two growers licensed to grow 488 plants each will now have 976 plants at one address.

A designated medical

marijuana grower can grow for two people at a time.

If each person has a 244-plant license, the grower can grow 488 plants.

123 Pot St.

Unit A

123 Pot St.

Unit B

1,952 plants

3

1

976

plants at

Unit A

976

plants at

Unit B

Designated

grower

2

488

plants

488

plants

488

plants

488

plants

244

plants

244

plants

244

plants

244

plants

244

plants

244

plants

244

plants

244

plants

1 plant = 30.5 plants

MURAT YÜKSELIR / THE GLOBE AND MAIL


On Sept. 19, 2016, in the same greenhouse where he'd spent most of his adult life growing cucumbers and tomatoes, Peter Muileboom found himself staring down the barrel of a shotgun. Robbers, disguised by nylons pulled tightly over their faces, had burst into the Muileboom family's Niagara Region farmhouse at about 4 a.m. pretending to be police – and were now ordering the then-62-year-old farmer to hand over his latest harvest: medical marijuana.

The robbery was interrupted by the real police, who descended on the area in droves after a neighbour heard the commotion and dialed 911. The robbers scattered. In a manhunt in which the canine unit and even a helicopter were deployed, five people were tracked down and charged with an assortment of criminal offences.

But in the end, Mr. Muileboom would wind up charged as well.

It was three years earlier, on the brink of bankruptcy amidst plummeting tomato prices, that Mr. Muileboom and his wife got into the medical marijuana business. They'd put their farm up for sale – the farm where Mr. Muileboom had lived his whole life – and received a surprising offer from a Brampton man. They could stay there, rent-free and with full-time pay, they said this prospective buyer told them, if they would help him grow medical marijuana. Mr. Muileboom agreed.

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Craig Ferguson, their new landlord, said he was licensed to do this, Mr. Muileboom told police in his statement after the robbery. Four people came by the farm to hand over their licences, he added, but he never saw them again.

Early on, Mr. Muileboom says he was instructed to just grow as much as he could – never mind the limits on the licences. Soon, Mr. Ferguson was co-ordinating weekly pickups. Each time, Mr. Muileboom told police, he would have between 20 and 30 pounds of dried marijuana, vacuum-sealed in one-pound packages, ready to go.

At the time of the robbery, according to a search warrant application filed by the Niagara Regional Police Service, three licences were registered to the farm, allowing it to grow a total of 513 plants at a time. But when police arrived, there were more than 3,000 plants in the greenhouses.

A snapshot of Ontario’s large-scale

personal grow-ops

Lake Huron

Barrie

Orangeville

Toronto

Lake Ontario

Hamilton

Stratford

Niagara Falls

London

Sarnia

Buffalo

Simcoe

Muileboom farm

Lake Erie

THE GLOBE AND MAIL, SOURCE: LOCAL MEDIA REPORTS

A snapshot of Ontario’s large-scale

personal grow-ops

Barrie

Lake Huron

Orangeville

Toronto

Lake Ontario

Stratford

Hamilton

Niagara Falls

London

Sarnia

Buffalo

Simcoe

Chatham

Muileboom farm

Lake Erie

Erie

THE GLOBE AND MAIL, SOURCE: LOCAL MEDIA REPORTS

A snapshot of Ontario’s

large-scale personal grow-ops

Barrie

Lake Huron

Orangeville

Lake Ontario

Toronto

Stratford

Hamilton

Rochester

Niagara Falls

London

Sarnia

Buffalo

Simcoe

Chatham

Muileboom farm

Lake Erie

Erie

THE GLOBE AND MAIL, SOURCE: LOCAL MEDIA REPORTS

Mr. Ferguson's original goal had been to turn the farm into a commercial LP – a proposal that was met with relentless backlash from the community despite the star-studded political team backing it, including former prime minister John Turner, who caused a stir when he showed up at a town hall meeting to support the proposal.

In August, 2014, the LP dream died. Their application was refused by Health Canada – a rejection that multiple sources who were involved with the venture say they saw coming, owing to internal whispers about the farm's existing grow-op.

This past March, according to search-warrant applications, police watched security-camera footage from the property they say showed Mr. Ferguson "dropping off envelopes of money for several people who were working in the grow operation." They also saw him carrying a full black garbage bag out of the processing area the day after the robbery. The video showed him tossing it into the back of an SUV, which another man got into and drove away.

Police also learned in March that, after the robbery, Mr. Ferguson had obtained a licence, in his own name, to grow another 146 plants at the farm.

More search warrants were executed and another 1,500 illegal plants were seized. Mr. Muileboom – who described his role as "kinda like a manager" – was charged with unlawful production of marijuana. Mr. Ferguson was charged with unlawful production of marijuana as well as possession of marijuana for the purpose of trafficking.

Both men declined to speak to The Globe. Their cases remain before the court.

But the robbery was hardly an isolated incident when it comes to such personal licences.

Tom Carrique, co-chair of the Canadian Association of Chiefs of Police committee on organized crime, said that in his force's jurisdiction – the suburbs north of Toronto – there have been two home invasions in the past year alone by criminals looking to steal medical marijuana from people who were overgrowing. And across Canada, he said, there have been a number of shootings and homicides linked to "what would be considered legal business within the medical marijuana framework. There have been numerous homicides connected to these locations."

In January, 2016, five robbers wearing disguises were arrested in Innisfil, Ont., just outside of Barrie, after they tried to pry open the door of a factory that had been converted into a personal grow-op. Police learned plants had been robbed from the same address the night before and that the thieves had come back looking for more.

And in Hamilton, a personal medical grow-op that was twice the suspected target of drive-by shootings this year – in one instance, bullets struck a neighbouring home, piercing the kitchen cupboards – is infuriating residents and city council alike. When angry neighbours took their concerns to city hall, police told them they would rigorously enforce any bylaw offences on the property, but because the owners had the appropriate licences, their hands were tied when it came to the grow-op.

Brenda Johnson, the councillor for the rural area, said it is "beyond belief" how many plants these "renegade" farmers are licensed to grow. On top of the security concerns, Ms. Johnson said the smell is a constant source of complaints from her constituents.

"I've driven by there and rolled down my windows. It probably took me three kilometres just to get the smell out of my car driving away – that's just how stagnant it is," she said. Hamilton City Council passed a motion this year, after issues with another personal grow-op in the downtown, to request a list of personal grow-op addresses from Health Canada – a list the federal agency will not provide.

Ms. Johnson said she is frustrated these grow-ops are being shielded.

"We should have those addresses. The police, at the very least, should have those addresses."

The security features of these grow operations – which frequently involve large and intimidating dogs – also keep anyone from accessing the property or learning more about what is happening there.

When a house on a marijuana farm in Niagara Region caught fire in 2014, it took firefighters more than an hour to get to the blaze because of menacing dogs guarding the property. The home burned to the ground.

That farm, owned by a company called Bio-Med Research Technology Inc., was purchased in 2013 and signed for by company director Ryan Quatsch. Both he and the company's owner, Leonard Daniel Wong, had previous drug convictions. In corporate documents, Bio-Med lists a farm property in Acton, a small town on the outskirts of the Greater Toronto Area, as its business address. It is the site of another medical marijuana grow-op.

In October, two Globe reporters visited the farm in hopes of clarifying its ownership. Up a dirt road, behind a red metal gate, in a gravel clearing next to a barn, three Rottweilers approached the reporters' car and started to growl. A sign on the barn with a photo of a snarling dog warned visitors not to get out of their cars without the homeowner present. Three cars were parked there, but no one emerged. The reporters left.

Neighbours know what's happening there and police confirmed it is a licensed grow-op, but no one seems to be able to say who runs it – although court documents and property records offer a few clues.

The property previously operated as a mushroom business called Oyster King, which, according to court documents, was run by three men: Bruno Pisani, a convicted heroin trafficker and associate of Canada's most infamous mob boss, the late Vito Rizzuto; Davide Compagnoni, who was convicted in connection with a 2010 jewellery store robbery; and Aleksandr Ostrovsky, a businessman named in a recent Toronto Star investigation as the owner of a temporary employment agency. (A lawyer for Mr. Pisani said that, at the time his client operated his mushroom farm, there was never any marijuana grown on the property.)

In 2009, the farm was purchased by a numbered company. That company had two officers and directors at the time, spouses Barbara Romanow and Mark Dafoe. During a major organized crime investigation in 2015, when police burst into a restaurant owned by convicted drug trafficker Diego Serrano, they seized records showing the numbered company had proposed selling the farm to a startup marijuana firm with ties to Mr. Serrano's family. The sale did not go through. The records also showed that the main building on the 125-acre farm was licensed to hold 700 plants but was big enough to hold as many as 1,000.

Reached by e-mail, Ms. Romanow said she had nothing to do with the farm. She declined to answer questions about who did.

Last year, Toronto police said, 40 per cent of the search warrants they executed in relation to the production of marijuana were at facilities "sheltered" by personal licences. All of these grow-ops were diverting their product to the illegal market, they believe. And approximately 70 per cent of the marijuana grow-ops that police have dismantled so far in 2017 had similarly been operating under personal licences.

In rural communities, Ontario Provincial Police (OPP) detectives said they have had three cases this fall alone in which grow-ops were determined to be growing beyond their limits. In two of these cases, they recovered weapons and identified ties to organized crime.

At a November boardroom meeting at York Regional Police headquarters in Newmarket, Ont., officers from York Region, Toronto and the OPP rhymed off the challenges they have faced with personal grow-ops: fake licences, expired licences, addresses with too many licences (the limit is four, but adding unit numbers to an address is one way around this) and licences for people who don't need or receive any medical marijuana.

"It's no different than with making meth, where they're smurfing [that is, breaking down a transaction into smaller transactions to avoid alerting authorities] for ephedrine pills. They're doing that with the grow permits," said OPP Detective Sergeant Lee Fulford, who works in the drug enforcement unit of the force's organized crime bureau.

Detective Jeffrey Ross of the Toronto Police Service's drug squad, says the costs associated with running a sophisticated grow-op are another red flag: industrial real estate, lighting and watering equipment, plus hydro costs that would amount to thousands of dollars a month.

"Who is able – unsupported by medical benefits – to spend thousands of dollars a month to grow their medicine? Who can afford that for their glaucoma?" Det. Ross said. "It just doesn't pass the sniff test."

The answer, police say, is that the marijuana is being sold – to illegal dispensaries or on the black market both here and abroad.

A massive grow-op was busted on Denman Island in British Columbia this summer as part of a Toronto police investigation of the Canna Clinic dispensaries. This "personal" grow-op, Det. Ross said, is believed to have been a supplier for dispensaries in Ontario.

Two more operations were busted in the Niagara Region this fall. While both locations had legitimate medical marijuana licences, Niagara police said "fraudulent information" had been provided to Health Canada in order to obtain them. Between the two properties, 14,000 plants were seized along with more than 64 kg of dried marijuana – more than 10,000 plants over the licensed limit. Two men, ages 60 and 79, were arrested.

Health Canada says a person convicted of drug charges within the past 10 years should not be able to obtain a licence. But the department says it only requires that applicants "attest" to a clean record. When police conduct a raid at an overgrown operation, they can seize only the surplus plants, which means there have been cases when they have had to leave hundreds of technically legal plants behind – in the hands of the accused criminals.

In Waterloo, Ont., police have been keeping an eye on a medical marijuana grow-op that set up shop in a former nursery there some time in the last year. The property is linked to a numbered company, the owner of which is a Toronto man named Yi Feng Lin. A man with the same name was part of a group charged in 2009 in a $16-million marijuana bust outside Brockville, Ont. He was charged with production of marijuana and possession of marijuana for the purpose of trafficking, according to the Waterloo Record, but was given an absolute discharge in 2012.

The government tried to phase out personal licenses in 2014 under then-prime minister Stephen Harper, after it became clear the previous personal-licensing regime was being exploited. Ottawa created a new regime, which was supposed to limit growing to regularly inspected commercial producers.

But patients argued this was unconstitutional, and last year, in the Allard decision, the Federal Court agreed, resulting in the current regulations that offer a choice: grow your own medicine personally or buy from a commercial producer.

The Allard decision was supposed to protect patients' rights to access medicine. But police say the ruling has instead empowered the organized-crime groups Prime Minister Justin Trudeau has said will be cut out by legalization. What is supposed to be for personal medication, investigators say, can instead be diverted to supply illegal dispensaries and the illicit street market.

"If we are to believe that [criminals] are not working together for the purpose of profiting … we are just being naive. These are [not] just individuals wanting to grow a bit of pot," Det. Ross said. "This is big business."

Today, many still question how the Allard ruling affects the federal government's ability to implement any changes to the medical regime. But Ms. McLellan is not one of them – arguing that that decision was reached in an entirely different context.

"You were dealing with a prohibited substance, but for a limited medical exemption. That entire landscape has changed. We are now dealing with a legal product that will be sold at retail or ordered online. The entire framework in which these earlier decisions were rendered has been turned upside down," she said.

Ms. McLellan agrees the move to eliminate designated-grower licences would almost certainly attract another legal fight – and acknowledges that could inspire reluctance on the part of the government, who has already lost that battle once.

"They may be a little gun-shy … but there is no question that the rules around medicinal [marijuana] need to be revisited," she said. "Otherwise, you've got a loophole in terms of diversion into the illegal market – and one of the key avowed purposes of legalization and regulation is to limit the illegal marketplace."

As long as these grow-ops are allowed to remain, experts warn, so, too, will organized crime in the space. Much of this marijuana is exported to begin with, police say. And even locally, they say there will always be a market for tax-free marijuana.

"Organized crime will find a way to exploit the system," OPP Det. Sgt. Fulford says. "Whatever regime there is, they will look for loopholes and they will try to exploit them."

Connect via email with reporters Molly Hayes and Greg McArthur


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