Green Relief, Inc., a Canadian licensed cannabis producer, has run into a bit of a problem. A private shareholder meeting in January revealed a company in financial distress. Two of the three company’s founders, Warren and Lyn Bravo, were accused of misappropriating around $14 million of investor funds for personal use over six years. The news came to light after the Financial Post obtained a recording of the shareholders’ meeting.
Warren Bravo stepped down as Green Relief CEO in February 2019. He was replaced in March 2019 by Dr. Neilank Jha. Jha is a neurosurgeon and a spine surgeon with an MBA from the Ivey School of Business and a Masters in Behavioural Economics from the London School Economics. Jha remains Green Relief’s current CEO. Jha’s company, Bodhi Research and Development, was acquired by Green Relief in 2019. Soon after taking the helm, Jha was informed that $200,000 in funds had been mishandled on his first day on the job.
In response, Jha brought Stephen Massel and Bota McNamara into the equation. Now CFO, Massel is a former Ernst and Young Auditor. McNamara, formerly with Weir Foulds, specialized in corporate insolvency and turnarounds, is now acting General Counsel for the company. Their objectives included cleaning up the balance sheet and figuring out how the company had been functioning financially. The numbers didn’t add up. The company conducted an extensive, months-long internal investigation. Led by Massel and McNamara, the process involved interviewing current and former employees, former auditors, contractors and suppliers, combing through records going back to 2013.
In the shareholder meeting video, Jha implied that the company had enough funds to stay in business through February 2020. But, in a follow-up interview with the Financial Post, he said that the company was liquid and would remain so for the “next few months.” He acknowledged that he was seeking additional investments in the company.
Green Relief was a pioneer in the medical cannabis industry in Ontario. In February 2016, Green Relief received a Health Canada cultivation license. In late 2018 and early 2019, Green Relief made a name for itself, using a pesticide-free cannabis propagation process that utilized an underground aquaponic farm.
Massel, in the video sent to the Financial Post, alleged that the Bravos billed Green Relief using fake invoices. He also accused the couple of using $1.3 million for the construction of a new home, spending $900,000 on credit card bills and vehicle leases, and using another $2.9 million on personal investments. Massel also alleged that the Bravos spent $3.7 million of Green Relief funds to support their other businesses. All in all, according to Massel and McNamara, out of $59.2 million in shareholder funds, $45.1 million was spent on long and short-term expenses, leaving $14.1 million unaccounted for. The Bravos have denied all allegations made by Green Relief executives against them.
This isn’t the first time Canada’s cannabis industry has dealt with allegations of financial misappropriation. In September 2019, Canada’s first fraud case came to light. Regulators in the Ontario Securities Commission outlined a list of accusations involving misuse of investor funds against Canada Cannabis Corp.