CEN Biotech reviving application for judicial review

Share

After being refused a licence to open the world's largest medical marijuana facility, CEN Biotech is reviving its application for a judicial review.

The company was informed in February that Health Canada intended to refuse its licence, amid mounting concerns about the conduct of CEN Biotech and its chief executive officer. CEN Biotech filed for a judicial review of that decision, but withdrew its application last week.

In a press release on Thursday, the company said the original application was abandoned as a result of a "procedural issue." It said a new application would be filed by the end of next week.

"The dismissal is merely a procedural issue to comply with certain procedural rules of the Court," CEN Biotech said in the statement. "The Application for Judicial Review will be refiled before April 10, 2015, and will pursue the same claims and relief sought as the original filing."

Though CEN did not say what procedural issue forced the company to refile its bid for a review, such applications are usually filed after the government issues a final decision. The company filed its first bid for a judicial review in February, after Health Canada notified the company that it intended to reject the licence bid – but before the final decision came on March 11.

In its original application, CEN Biotech asked a judge to overturn Health Canada's rejection of the licence, saying that the regulator had acted unfairly.

The company applied to grow 600,000 kilograms of medical marijuana near Lakeshore, Ont., under a new federal program that began last year. However, Health Canada rejected CEN Biotech's application amid serious concerns about the company's conduct; including the emergence of multiple different signatures attributed to its CEO, Bill Chaaban, on regulatory documents; claims by CEN in business circles that it had ties to the Health Minister, which the Minister was forced to deny; and revelations that the company had fabricated the identity of an employee.

CEN's conduct came under scrutiny last year when its shares soared amid false and exaggerated statements made by the company, including claims that it had been licensed, or was close to being licensed, when it was not. The company also suggested to investors that it was partnering with Health Canada, which the government later said was misleading. Such claims helped push up the price of shares in CEN's parent company, Michigan-based Creative Edge Nutrition, by a significant amount.

At its height, the company was worth more than $350-million last year, despite having no licence to operate. At the same time those claims were being made to investors, Mr. Chaaban was selling millions of his own shares in the penny stock company at a steep profit.

The Ontario Securities Commission said last week that it has "an active investigation" into CEN Biotech and its parent firm. The regulator said it could not comment further.

Given that Creative Edge Nutrition is traded on the loosely regulated U.S. over-the-counter (OTC) market, it is likely that the OSC is working in conjunction with U.S. regulators on the investigation, since that is typically how it conducts such probes involving cross-border matters.