Greg Engel, CEO of licensed cannabis producer Orgranigram, was the target of online criticism last week after Yahoo! Finance Canada published an article in which he called for better enforcement of Canada's new cannabis laws.

Critics complained that Engel's comments amounted to calling for police to arrest his black market competition, but the cannabis executive now says his remarks are being misconstrued.

"I'm not supporting or advocating for police enforcement or activities in any shape or form," Engel said in an interview with The Leaf News.

"There's a path to move into the legal market, and if you're looking to shut down the black market I think there's ways to do it without (police) enforcement."

Engel argues that the federal government has made itself responsible for regulating all cannabis in Canada, but isn't doing enough to bring the unregulated market to heel. Specifically, he'd like to see Ottawa go after the banking and payment processing services used by illicit cannabis dispensaries.

Cannabis plants grow at the Organigram facility in Moncton, N.B., in a 2016 file photo. (Ron Ward/Canadian Press)

"If you are an unlicensed dispensary, selling today, then a bank should not be banking you, because it's an illegal operation," he said. "And that's what I mean by 'enforcement'."

The Organigram CEO acknowledged that Canada's legal cannabis industry was made possible by people who broke the law to sell cannabis, and said he supports efforts for criminal justice reform in the cannabis space.

But since legalization last October, Engel said, Canada's cannabis industry has been split into two distinct markets: "One that works within a set of rules, and one that works beyond the rules and is free to do what they want."

Engel believes the regulated cannabis industry can compete with the unregulated industry in terms of quality. But he points out that illicit producers enjoy a price advantage: they don't pay the federal cannabis excise tax like licensed producers do, and they don't have to pay for analytical testing. On top of that, Engel points out, the legal industry must play by strict rules around promotion, rules often flaunted by illicit players.

"There has been a proliferation of online sites for ordering, and for the average Canadian, they don't necessarily see a difference — and understandably so, because those groups are able to market and promote in a way that we're not."

The furor over Engel's comments could be linked to a perception, held by some cannabis advocates, that the new legal cannabis industry is unjustly dominated by corporate "suits" instead of people who suffered under prohibition.

Organigram CEO Greg Engel. (Supplied)

"I don't, frankly, disagree with that, in some aspects," he said.

"Cannabis companies, and some of the larger companies, are multinational, global multibillion dollar companies... But at the same time, we also embrace the culture... We've made sure that we have staff that are tied to the culture and understand it, and test our products and make sure that we don't lose that linkage. I think it's important."

Still, Engel said investors in large, publicly-traded cannabis companies like Organigram want to see "proven business leaders that have operated large companies and have experience in global markets."

Engel believes cannabis consumers will choose regulated, tested cannabis products over illicit ones, and hopes more illegal cultivators will choose to enter the legal cannabis space.

But he admits that completely eliminating Canada's black market for cannabis is unrealistic.

"That's never going to happen," said Engel.

solomon.israel@theleafnews.com

@sol_israel