Tough questions were asked last week about shares being sold as an investment in the hemp industry.
The Manitoba Securities Commission issued an investor alert. The suspicions were triggered by forms people were asked to sign when buying shares.
“There were such obvious problems with the forms that it raised flags immediately,” said Doug Brown, the security commission’s director of enforcement. “You don’t even know what you’re investing in.”
The shares were being sold in the Dauphin area, where there are plans to build two hemp processing plants. Buyers were asked to sign a form of acknowledgement to buy shares in one or more numbered Manitoba companies.
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Brown said the forms gave the impression that the money would be invested in Consolidated Growers and Processors, a company that plans to process hemp at Dauphin. But it was not clear whether the invested money would help build the processing plants at Dauphin or whether it would be spent elsewhere.
In a written statement issued May 21, Consolidated Growers and Processors said it will co-operate with the investigation and expects to be cleared of any wrongdoing.
To the best of its knowledge, CGP did everything in accordance with the Securities Act and advice given by the company’s Manitoba counsel, said CGP chief executive officer Larry Siddens in a news release. Sidden said in the statement that he expects the issue to be resolved in “the very near future.”
According to Sidden, CGP plans to move forward with its business plan, which will include a large increase in hemp acreage this year, as well as a temporary processing facility this fall.
The shares being sold in the Dauphin area had not been qualified for sale to the public under the Securities Act, said Brown of the securities commission. He would not identify the sellers, but noted they were not licensed to market securities.
An investigation by the securities commission could lead to a hearing and possibly charges against those involved. By the close of last week, it was not yet clear to the commission whether the contraventions of the Securities Act were deliberate or an oversight.
CGP, which is promoting the expansion of hemp production on the Prairies, announced last month that it would build two processing plants at Dauphin. One plant is to process hemp fibre and the other would process the seed, creating about 100 jobs.
According to the securities commission, investors were asked to sign the form of acknowledgement under the name of Parkland Industrial Hemp Growers Co-op Ltd.
A member of the growers co-op said his group was not selling shares. The main purpose of the co-op, said Jim Pavlin, is to share information among farmers about how to grow hemp in the area.
The securities commission continues its investigation. One of the key questions is who co-ordinated the share offering.
Dauphin’s chamber of commerce said people still want to buy shares, despite the alert issued by the securities commission. People knew there were risks when investing, “but they’re still interested in getting involved,” said executive director Moby Christoffersen.
The chair of the hemp growers co-op was among those quoted in the statement issued by CGP May 21.
“I haven’t received a single negative call,” he said in the statement. “The farmers and the community are still behind this 100 percent.”
It was learned late Friday that Doug Campbell was no longer president of CGP’s Canadian operations. There was no word from CGP to explain Campbell’s departure.
