A Winnipeg-based cannabis producer has been stripped of its senior management team after a third-party investigation found the company sold unauthorized product in Saskatchewan.

George Robinson, the contractor hired to investigate the troubled company facing two Health Canada recalls, said the three Bonify executives were also accused of bullying and threatening staff workers who tried to speak up.

"I don't know what their motivation and driver is, but what they did was not at all remotely close to following the regulations," said Robinson, chief executive of RavenQuest Technologies Inc, of the top executives during a 50-minute news conference Thursday in Winnipeg. He decried the conduct of the executives as "creative entrepreneurialism."

Robinson said a number of front-line staff tried to speak out about the 200 kilograms of unlicensed cannabis that arrived at its Winnipeg production facility but were pressured to look the other way.

"That's a real, sad position to put really, good quality people in, but sometimes they make the choice to protect their families, their livelihood and we don't hold them accountable for those forced decisions," he said. "In fact, we continue to support them."

Complaints about the unauthorized cannabis eventually reached senior managers and the company's board of directors.

Earlier this month, Health Canada issued a recall of two Bonify strains over contamination issues that were sold at three Saskatchewan retailers — Cannabis Co. in Regina, Spiritleaf in Moose Jaw and The Pot Shack in Saskatoon.

This free-standing concrete vault at Bonify's Winnipeg production facility can store 3,000 kilograms of product, company officials told CBC during a 2017 tour of the premises. It's heavily guarded with motion detecting cameras and vibration sensors built into the 48-centimetre-thick walls. (Holly Caruk/CBC)

Robinson confirmed Thursday the product was unauthorized, containing traces of bacteria, yeast, mould and the unconfirmed presence of E. coli. He refused to call the products "illegal" or "illicit."

Manitoba's cannabis regulators proceeded to yank all Bonify products from stores as a precaution last week, but Robinson said the irregular product was never sold in the province.

The consultant said he was not aware of the source of the unauthorized cannabis or whether organized crime played any role.

The three executives, whom he would not name, were terminated with cause and an executive assistant was dismissed. One member of the board of directors has been suspended, Robinson said.

Bonify may have 'overpromised'

He said it appears Bonify sold unapproved cannabis because it felt pressure to satisfy its supply agreements with Saskatchewan and Manitoba.

"I think there was some overpromising happening," Robinson said.

Health Canada is investigating what went wrong, but he said he was not aware if police authorities were also probing the company. Robinson said it would be up to federal and provincial regulators to alert police.

If any charges are laid, he expects it to be "precedent-setting," as these errors are new territory for Canada's licensed cannabis sector.

Mandy Fisher, co-owner of the Spiritleaf in Moose Jaw, Sask., is disappointed that unauthorized cannabis product disguised as legal weed made it onto the shelves of her cannabis retailer. (CBC)

Of the unauthorized marijuana sent to Saskatchewan, 52 packages of 3.5 grams each made it to market, all of which were sold.

Outside one of those stores, a Spiritleaf outlet in Moose Jaw, co-owner Mandy Fisher expressed relief that a federal department was investigating.

"The reason Health Canada is keeping a close watch on it is to keep the consumers safe, and that's our goal in the store, too," she said. "[I'm] definitely not happy to hear that we got product that wasn't supposed to be here."

The majority of the unauthorized shipment never left the Winnipeg production facility and was never sold in Manitoba, Robinson said.

A second recall notice affecting Bonify, issued on Christmas Eve, removed 14 additional lots of Bonify dried cannabis from Manitoba and Saskatchewan.

The stock was targeted for labelling and record-keeping issues and was not among the shipment under investigation for being unauthorized, Robinson said.

Nearly 5,900 units of these products were sold in Manitoba and at two Saskatchewan retailers.

Retail sales restricted

Robinson said Bonify voluntarily chose to suspend all retail sales in Saskatchewan and is no longer selling medicinal cannabis as the company tries to restore regulators' confidence.

He acknowledged it will take time for Bonify to restore the trust it lost, but he believes they can right the ship. They had a stellar record until an unexplained "cultural change" before recreational cannabis was legalized on Oct. 17 altered course for the company.

RavenQuest will be providing management services for the company for at least the next three months, Robinson said.

"We want to build that trust again with the patients and with the consumers to say that this was an anomaly that happened," he said. "We've corrected it very quickly and decisively and we're going to move forward."