A Winnipeg cannabis producer will face no criminal charges from the RCMP after a third-party investigation revealed it sold unlicensed product.

But Bonify is facing a new challenge: a lawsuit from a former executive who was stripped of his job after the unauthorized product was discovered, alleging he was wrongfully dismissed.

A third-party investigation found former Bonify executives hired an outside agent to buy what turned out to be illegal product.

The company had its products seized, top executives turfed and sales licence suspended by Health Canada.

A Health Canada spokesperson said Bonify possessed, distributed and sold product it bought from an illegal source.

Investigation not necessary: RCMP

RCMP have determined that a full investigation won't be necessary.

"The review of information has been concluded and the RCMP will not be investigating," the statement said.

Asked for more details, the RCMP said late Monday afternoon it forwarded the "review/findings" to the provincial Justice department.

The province said the response from RCMP "requires further review ... As such, we cannot provide further comment at this time."

George Robinson, who was hired to investigate Bonify and is now their acting CEO, was unaware RCMP were not pursuing charges until he was informed by CBC News Monday.

George Robinson, acting CEO of Bonify, speaks at a news conference last December where he announced that three top executives would be let go for misconduct. He also said the executives bullied and threatened staff workers who tried to speak up. (Ian Froese/CBC)

He noted the police never contacted Bonify to seek any of the documentation his investigation uncovered.

"I would suggest that there was enough information for them to take a longer look at this thing, but we weren't contacted or asked about it," he said on the phone from Vancouver.

Robinson said the RCMP's decision won't affect the company, which is acting in compliance and continuing to grow cannabis as if it were still selling.

"It doesn't change anything about the way that we're operating in the business."

I think what would have been nice to see is them to put a fingerprint on this thing, to say, 'If it happens again, this is what we're going to do.' - George Robinson, Bonify

Health Canada previously issued a recall notice for two strains of Bonify cannabis sold in Saskatchewan in December. The recall prompted Manitoba to suspend the sale of Bonify products.

In response, the company called for a third-party review, led by Robinson, which found the company sold unlicensed product at retailers in Saskatoon, Regina and Moose Jaw.

The investigation found that senior management bullied frontline staff into staying quiet when 200 kilograms of unlicensed cannabis arrived at the Winnipeg facility, he said. Three executives were later dismissed.

Robinson theorized that RCMP is in a tricky spot because there is no precedent of a legal cannabis company facing criminal prosecution.

"From an industry perspective, I think what would have been nice to see is them to put a fingerprint on this thing, to say, 'If it happens again, this is what we're going to do.'"

Ex-employee left in the dark: lawsuit

Meanwhile, Paul Yeoman, Bonify's former chief marketing officer, is suing his former employer for wrongful dismissal.

He argues he was dismissed without responding to the allegations or even being interviewed, despite assurances he would have the chance. He said he knew of no details about the investigation until he came across news coverage on Dec. 27, 2018, saying that he lost his job.

Yeoman said his reputation was tarnished that day by the publishing of allegations that he knowingly helped to obtain illegal cannabis and bullied staff members who wanted to speak out.

He adds that Robinson was motivated by self-interest to throw out former executives since his consulting firm, RavenQuest Technologies Inc., was brought on to investigate and later benefited financially by being hired to run the company on an interim basis.

The varied allegations, contained in a statement of claim filed on Friday at Manitoba's Court of Queen's Bench, have not been proven in court.

Yeoman is asking for compensation in response to the dismissal which he alleges damaged his self-worth, self-esteem and caused mental distress, the lawsuit said.

"Bonify reached a conclusion not supported by evidence, which outcome was reached for an ulterior purpose of making the plaintiff a 'scapegoat' for Bonify's alleged failings."

Yeoman adds he did not knowingly participate in any misconduct that resulted in the obtaining or selling of unauthorized cannabis.

"The timing and manner in which he was dismissed lacked good faith and fair dealing and was unduly insensitive," the lawsuit said.

Confidence suspension will be lifted

Robinson, who declined comment on the lawsuit, is confident Health Canada will lift the suspension of Bonify's sales license.

The producer appealed the decision last month and received an assurance last week that the federal department is evaluating.

Robinson said a Health Canada inspection in February turned up no issues.

"We continue to supply them the information as if we were an operating business and keep them up to date on what we're up to," he said. "It's just a process. You got to prove where you failed, that [you've fixed it] and you're doing it repeatedly."

In the meantime, Bonify is operating at full capacity and growing and storing new cannabis as if they have customers waiting.

He said they could function at this pace for as long as a year.

"It's not ideal when you have cash burn and no revenue coming in," Robinson said. "You've got to, you know, build up your war room with some money here to make sure that you get through this."

Matt Maurer, a Toronto lawyer who specializes in cannabis legislation, said it's disappointing that no criminal consequences are forthcoming when it seems like something illegal occurred.

"If something improper did happen, one would hope that a licensed producer that operated outside the law would face the consequences just like any illegal dispensary owner," he said. "There shouldn't be two standards."