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In the early days of Canada's federally regulated marijuana industry, just as Ottawa was drawing up the rules for the new sector, Health Canada allowed the companies selling the product to make a crucial decision regarding consumer health and safety.

Rather than implement strict requirements that each company screen its products for illegal pesticides, in order to show the government and consumers that they were free of potentially dangerous chemicals, the health regulator let the industry decide for itself.

Not long after, several of those companies who produced medical marijuana – the same industry that will supply cannabis to the recreational market once it becomes legal this summer – decided pesticide testing wasn't necessary. So they simply elected not to do it.

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Read more: Marijuana companies caught using banned pesticides to face fines up to $1-million

It was 2014, the industry was on its way to becoming a multibillion-dollar business, and there was no one to tell them they had to test. Health Canada revealed that fact in an e-mail to The Globe and Mail this spring, exposing a gaping loophole in the industry's safety regulations.

"As testing for pesticides was not a regulatory requirement, licensed producers took the business decision to stop this testing," Health Canada said.

The business decision was that screening marijuana for illegal pesticides cost money, so why not save those costs? The ramifications from that decision have had a profound impact on the industry, and on medical marijuana patients, in the past year. And it has raised questions about Health Canada's oversight of the sector as the government prepares to legalize the product for recreational use in 2018.

In the past year, several instances of banned chemical use have emerged in the industry, prompting recalls of products that manufacturers had said were clean. Five companies have been found with plants or products containing illegal pesticides, or banned chemicals related to pesticide use. This has prompted concerns, and anger, among consumers, particularly those who say they got sick after consuming government-licensed medical cannabis.

As the government tries to move marijuana sales from the back alley to the legal market, the contaminant problem has also raised alarms with laboratories that test consumer products for purity. Wendy Riggs, manager at M.B. Laboratories Ltd. in Sidney, B.C., a federally accredited facility, said commercial enterprises should not have been left in charge of their own health and safety screening protocols, particularly when selling pain-relief medicine to people with conditions such as late-stage cancer and other diseases.

"It is morally and ethically unconscionable to be using banned pesticides," Ms. Riggs said. "You have a very serious breach of trust with the Canadian people by allowing pesticide in a medicine stream to people who already have compromised immune systems."

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After a series of revelations by The Globe and Mail over the past year, which demonstrated that the pesticide issues within the regulated marijuana industry were deeper than the government realized, Health Canada reversed that decision. In May, the regulator announced it would implement mandatory pesticide testing for all companies in the industry, to ensure the products weren't contaminated.

And in December, Health Canada revealed to The Globe that it was introducing fines of up to $1-million per violation for any company caught breaking the rules in the future.

But those two key regulatory changes did not come easily. On numerous occasions, Health Canada told The Globe that none of these steps were necessary, and that the problems were under control.

It took months, and a mounting body of evidence, for Health Canada to finally change its mind.

In the fall of 2016, Health Canada told The Globe it had no plans to introduce pesticide testing, even as reports were emerging from the United States that such problems were a reality for the cannabis sector, and regulators there were growing concerned about public safety.

In Colorado, Oregon and Washington, where cannabis is legal for recreational or medical use, regulators were finding potentially dangerous chemicals turning up in products all over those states – a sign that some commercial growers were struggling to produce crops at mass scale, and to deal with infestations of mites and mildew that often come with large, indoor operations. Adding banned chemicals was a shortcut to saving a crop that was potentially worth hundreds of thousands of dollars.

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But in Canada, the regulator assumed companies could look out for themselves. The industry knew such chemicals were banned, and therefore would not be using them, the government reasoned. "We have not required licensed producers [LPs] to test for unauthorized pesticides, nor have we been testing all LPs, and it is because we expect the companies to be proactively watching and taking the appropriate measures to ensure non-authorized products aren't used," a senior Health Canada official told The Globe.

If the illegal use of pesticides such as myclobutanil and bifenazate – which are banned for use on cannabis due to potential health dangers, and have raised serious concerns in the U.S. – were to be discovered here, Health Canada said it would not hesitate to punish those companies. If necessary, it would even revoke their operating licence, the regulator said.

But as it turned out, some companies weren't as compliant as Health Canada believed. Last December, Mettrum Ltd. announced a large recall of its products, but did not reveal in press releases that the recall was due to illegal pesticides. The chemicals were only mentioned in passing during lengthy automated phone messages left for customers. It was not until The Globe and Mail called the company's customer service line, asking if myclobutanil was contained in the recalled products, that the company and Health Canada publicly acknowledged that it was true.

Other than these short phone messages to Mettrum customers – which implied the pesticides were of minimal risk to consume – there is no evidence that Health Canada or the company ever intended to reveal the reason for the recall to the broader public, leaving some consumers without access to important information.

A few days later, a press release issued late in the day from Organigram Inc. revealed that it too had been caught with banned pesticides in its products. In both cases, the chemicals were discovered almost by accident.

Mettrum's problem came to light when the regulator happened to be screening the products for another source of contamination. Organigram's situation was uncovered when rival Aurora Cannabis Inc. struck a deal for a bulk purchase from the company. Aurora resold the product to its own customers, and also sent some of the bulk order for testing at a lab. When the results came back, they showed signs of two banned pesticides, prompting Aurora to recall the product it had already shipped to consumers.

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Organigram and Mettrum also issued mass recalls, and said they had no idea how their products came in contact with banned pesticides. But a former employee of Mettrum, Thomas McConville, told The Globe he had witnessed myclobutanil being applied to the plants at that company's operation, and that the bottles were hidden in the ceiling tiles of the office when Health Canada inspectors visited the site.

Mr. McConville also provided e-mails to document that the matter had been discussed internally with the company's executives. Health Canada confirmed it had been told of the problem, but said it left the matter up to the company to investigate itself. The company found no problems.

But even with these examples of harmful pesticides showing up in regulated medical marijuana, Health Canada insisted mandatory testing wasn't necessary.

Mettrum and Organigram were slapped with individual requirements to test all products going forward, but no formal rules were created for the rest of the industry. On Feb. 7, the regulator told The Globe it would only go as far as random testing – which it said would be enough to detect any problems, and to fully protect consumers.

"In response to recent events, Health Canada will begin conducting random testing of cannabis products produced by licensed producers," Health Canada said. The move was being made to "provide added assurance to Canadians that they are receiving safe, quality-controlled product."

The problem with cannabis cultivation, however, is that the process is susceptible to outbreaks of mildew and other pests, particularly in large-scale, indoor operations. Such outbreaks can ruin entire crops, meaning that companies have a financial incentive to resort to potentially harmful chemical shortcuts to protect their investments. When asked how random tests would be enough to police an industry in which one producer had already been found to hide such tactics from the regulator, Health Canada insisted the plan was sufficient.

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"Random testing is a scientifically valid method, used in a variety of regulatory settings," Health Canada told The Globe in March. "The regulations are clear – licensed producers are responsible for ensuring that their products comply with the regulations."

Then Health Canada got an unwelcome surprise.

By late April, its random testing regime suddenly began turning up more evidence of illegal pesticides.

Samples taken from plants at Hydropothecary Corp. tested positive for myclobutanil, while plants at Peace Naturals Project Inc. turned up signs of piperonyl butoxide, a chemical often used in conjunction with pesticides that is also prohibited for use on cannabis. The company said the contamination was the result of a sanitation process that ended up impacting the plants.

Of the seven random tests Health Canada conducted, two companies failed. These developments suggested the problem was not as isolated as Health Canada first insisted. In May, the regulator announced it would institute mandatory pesticide testing, an idea it had steadfastly resisted only a few months earlier.

Meanwhile, patients who consumed some of the tainted products began reporting strange symptoms, including serious weight loss, debilitating headaches, abdominal pain and burning rashes. Scott Wood, a 53-year-old former military policeman in Alberta who was prescribed cannabis for a serious back injury he suffered while serving, said he developed lung problems that caused him to nearly pass out on several occasions after consuming some of Organigram's recalled products. Wayne Jory, a 55-year-old homebuilder, said he struggled to climb a ladder, developed severe muscle pain, and lost 40 pounds from his 215-pound frame.

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The Globe and Mail arranged to have some of Mr. Wood's sealed containers of unused product tested at an accredited lab, which turned up evidence of three additional banned pesticides. Organigram denies using those chemicals on its plants.

Then, late in 2017, with the government drawing up regulations for the recreational industry, including the forthcoming mandatory testing requirements, Health Canada told The Globe that it will also introduce financial penalties for unauthorized pesticide use.

Any company caught breaking the rules on contamination could be fined up to $1-million per violation, the regulator said. A company that doesn't pay those penalties could find its licence suspended or pulled.

In addition to the new fines, "Health Canada may also refer matters to law enforcement for consideration for prosecution," department spokeswoman Tammy Jarbeau said.

Such penalties were not contemplated a year ago, when the regulator said no further steps were needed. When recreational cannabis becomes legal, a dramatically different set of rules will be in place compared to the ones Ottawa originally envisioned.

Meanwhile, several class action lawsuits have been launched, including one that will seek damages for health problems suffered by Organigram patients who were exposed to the tainted products. The company has said it will fight the allegations.

At the time of the recalls, one patient who sought out medical marijuana for pain relief said he turned to the regulated industry for a reason. "I made a choice to go the medical-marijuana route, despite paperwork, numerous medical appointments and cost, because I wanted to feel safe about what I was putting in my body," said the man, who requested anonymity because he didn't want do disclose publicly he was using medical cannabis. "I felt this was safer."

Similarly, former Mettrum client Patty Wade, a retired nurse, told The Globe and Mail that her trust in the new industry was shaken. Products she had been told were clean instead contained potentially harmful pesticides.

"When you are trusting a company to be healthy, you would have thought that the government would have ensured this," Ms. Wade said.

"I think this has probably given everybody a wake-up call."

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