Medicinal Cannabis – Fraught with Controversy


Over the past few years, the medicinal cannabis industry has seen controversy leading to sacked Boards, crumbling share prices, and even arrests.

Namaste Technologies

Quite recently, Namaste Technologies fired and sued their CEO, Sean Dollinger.

Namaste is a global leader providing a cannabis eCommerce solution, now worth over USD $1 billion.

Dollinger had been terminated after an internal investigation found “evidence of self-dealing” and “breaches of fiduciary duty” – essentially insider trading. This breach is said to have concerned with Namaste conducting transactions with organisations in which Sean Dollinger holds an interest.

Dollinger has denied he has done anything wrong, and has now counter-sued Namaste, and the case is now before the Ontario Superior Court of Justice Commercial List.


Aphria, one of the Canadian giants, has been under scrutiny since December, when allegations of self-dealing and dodgy business in Latan America, spelled out in damning reports by Hindenburg Investment Research.

The first report, released in early December 2019, raised major red flags in Aphria’s C $280m Latin America acquisitions, such as:

  • The official registered office of Aphria’s C$145m Jamaican acquisition is an abandoned building that was sold off by the bank earlier in the year.
  • Aphria’s C$50m Argentine acquisition publicly boasted sales of US $11m in 2017. A worker at the company, however, affirmed that 2017 revenue was only US $430k.
  • Documents show that Aphria insiders were likely undisclosed beneficiaries of the deals, with Hindenburg estimating Aphria diverted upwards of C $700m via such transactions.

Several weeks later, Aphria had a hostile take-over offer by Green Growth Brands (GCB), of which Hindenburgs second report raised a number of concerns:

  • GGB’s second largest shareholder is a fund sponsored by Green Acre Capital, a firm that lists Aphria CEO on its board of advisors.
  • GGB recently listed a current Aphria board member on its own board of directors. Other recent GGB directors have affiliations with Aphria and its related persons.
  • GGB was formed in 2018, has almost no revenue or tangible assets, and has limited operations. Despite this, its newly-listed, thinly-traded stock has spiked to a market cap of ~C$890m on average daily dollar volume of only ~$1.3 million.

An investigation found that some non-independent did not fully disclose their relationships with the assets acquired in Latin America, but that those acquisitions were done at a fair price.

Aphria has a lot of work ahead to repair the damage done to their reputation.

THC Global

On to Australia, where in March last year the medicinal cannabis community watched on as an internal brawl was carried out at THC Global (Then THC Pharma).

In early March last year, in quick succession there was a major upheaval in management. The first sign was when several senior staff members were removed, which was followed by the calling of an extraordinary shareholder meeting by then non-executive Director Alan Beasley.

Shortly before the meeting, both the CEO and CCO of THC Global abruptly resigned. This cleared the path for Mr Beasley to move that all Board Members except major shareholder Steven Xu were to be removed from the Board, a motion that passed with 70% of voted in favour.

With a new Board established, led by Alan Beasley as Chairman, Ken Charteris was hired into the CEO position and Andrew Beehag was instated as Lead of its Medicinal Cannabis Division.

Since this tumultuous time, THC Global has been boosting ahead. They now have an operational research cultivation facility, a huge GMP certified manufacturing site (bought from Leo Pharma), and a 6 hectare commercial cultivation site awaiting license, leading to a steadily increasing share price.


Ross Smith – called by some the Marijuana Mogul – and now living in New Zealand, co-founded a company called Medicann. Although the company raised around NSD $1.5 million, co-founder Brendan Ogilvy stated to have been engaged in a months-long altercation with Mr Smith, having ‘disagreements’ in management. This led to Medicann being forced into liquidation less than a year after forming and months after legislation changed allowing for medicinal cannabis.

Previously Mr Smith, who founded Australia’s first listed medicinal cannabis company Phytotech (which for a while was MMJ Phytotech), had his first run in when he was forced to resign as an Executive Directory after a series of threatening and explicit rants on social media.

Ross Smith removed the posts and said that his social media account had been hacked.

Along with Phytotech, Mr Smith has been a serious investor in MGC Pharmaceuticals and New Zealand company Medicann.

Last year, Ross Smith also clashed with the MGC Pharmaceuticals board, posting personal attacks on social media and investor chat boards. Understandably, MGC Pharma has since cut ties with Mr Smith.


Over several months of early last year, e-Sense Lab saw its own Board-Investor infighting.

It started in January, over terms and merits of a distribution agreement, the vesting of associated performance rights, the exit of key personnel, and the make-up of the board.

We aren’t going to go into the details of the why, as that deserves its own post, but a group of investors wanted the three Israeli board members removed, and backed the Australian Chairman Brendan de Kauwe. This led to the Israeli’s removing Mr de Kauwe as Chairman, and calling a special meeting to vote on the Board.

Mr de Kauwe initiated legal proceedings in Israel, however these were rejected by the court.

This was followed by shots being fired back and forth, with the three Israeli board members accusing Mr de Kauwe and his backers, among other things, of attempting to seize control of the company by withholding capital raising activities. Mr de Kauwe then established a website to contest the attack, accusing his fellow board members of dodgy dealings.

This came to a head at the shareholders meeting, which ended with Brendan de Kauwe and his supporters losing their position in the Board, quickly followed by two of the surviving members resigning.

Thanks to Rachel Williamson at Stockhead for tracking this story.


These are just some examples from throughout the industry, and it shows that the cannabis industry is no different to others, that it’s not all sunshine and flowers.

However what is clear is that while there have been upsets, the majority are due to conflicts of personality rather than anyone doing anything unethical or illegal.



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Blaise Bratter
Blaise Bratter is the Chief Contributor to CannabisIntel. Being involved in the Australian cannabis industry since legalisation in 2016, he is now Operations Manager for ASX listed company MGC Pharmaceuticals.

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