An American hemp oil manufacturer that was previously caught selling its product illegally in Canada is once again putting its Canadian market plans on hold after telling its sellers to partner with a B.C. company that isn't licensed by Health Canada and is run by a man with a criminal record.

In May, HempWorx of Las Vegas was forced to stop selling its cannabidiol (CBD) oil in Canada following a CBC News investigation, which revealed it was not approved by Health Canada and wasn't allowed to be imported into the country. HempWorx is aggressively expanding into international markets including Ireland and Ghana and, according to a webinar recently held by parent company MyDailyChoice, it planned on getting back into the Canadian market by August. Its CBD oil sells for $69 to $89 a bottle.

Cannabidiol oil is derived from hemp plants. It doesn't get you high but it is much sought after in the alternative medicine world for a slew of conditions though its purported health benefits are still in question. But federal authorities say CBD oil is illegal without a medical marijuana prescription until October when cannabis is legalized.

The webinar stated the company was working with Mato Creation Corp., "an Indigenous medical cannabis clinic."  It said Mato Creation "specializes in manufacturing and distribution of hemp-derived CBD products" and works closely with health practitioners through its online membership program.

However, when contacted by CBC News, Health Canada said, "Neither Mato Creation Corporation nor HempWorx are federally licensed producers. The only legal commercial source of safe, quality-controlled cannabis for medical purposes in Canada is through purchase directly from a producer licensed by Health Canada."

After CBC News contacted HempWorx about the plan, the company denied in a July 25 statement it was planning to start selling the product without proper licensing. It then posted a statement on its Facebook page.

"August 1, 2018 is no longer a confirmed launch date. As industry guidelines evolve, we want to be 100% confident in our launch. We have experts who are doing more compliance and regulatory due diligence," the Facebook statement said.

The company also told CBC News, "We have communicated with Health Canada and have assured the agency that we are not selling or importing HempWorx products from the United States."

The webinar instructed its would-be sellers and buyers to pay Mato Creation a $150 registration fee. Mato Creation would connect HempWorx sellers and buyers with a doctor via video conference to get a prescription. That would allow sellers and buyers to buy CBD oil. 

CEO's past convictions

Mato Creation was registered in Kamloops, B.C., in May. While it has a logo and website under development, it isn't quite clear what the company will do. Its CEO, Vern Parkhurst, is not licensed to produce cannabis.

Alberta court records show Parkhurst has a criminal conviction for fraud under $5,000 in 1998, and for possession of a prohibited weapon in 1999. He was fined in both cases. In 2006, he was convicted of mischief/damage under $5,000, for which he was given a suspended sentence and ordered to pay restitution.

Section 50 of the federal Cannabis Regulations requires all licence holders to have a valid security clearance. That includes company directors and officers.

According to Health Canada "key personnel are subject to a two-fold security clearance process. This involves a criminal record check and a law enforcement record check." Health Canada said a security clearance could be denied to someone with past convictions, though each case is reviewed on its merits.

A former business associate also alleges Parkhurst owes him a large sum of money. He parted ways with Quebec-based GoliathTech Inc., which specializes in custom piles for construction.

GoliathTech Inc. CEO Julian Reusing says he has hired lawyers to collect more than $80,000 from Parkhurst.

'Matter is before the court'

GoliathTech CEO Julian Reusing alleges Parkhurst ran afoul of the franchise agreement rules for GoliathTech. He has hired lawyers to pursue legal action against Parkhurst and recover more than $80,000 in equipment and unpaid franchise fees.  

Reusing said Parkhurst took deposits from customers of GoliathTech on jobs and then failed to do the work.

"I would not give the guy one penny," said Reusing.

Parkhurst's lawyer, Harrison Jordan, said his client "vehemently denies the allegations by Mr. Reusing, and has no further comment as the matter is before the court."

Jordan did not explain with which Indigenous group or medical practitioners Mato Creation is affiliated. 

He said his client has not made a licence application to Health Canada.

"You don't have to be a licensed producer per se to make a mark in the industry," said Jordan.

He said generally speaking, there are ways that individuals and companies can participate in the legal cannabis industry "without touching the plant." That can be done through agreements with the licensed producers, he explained.

He said Mato Creation is in the development stages of establishing a cannabis-related business and it will be in compliance with all applicable laws in Canada.

He said no product has been sold by Mato Creation and that it will not establish a telemedicine service or registration fee at this time.

Sellers question plan

In a testy Facebook exchange with a HempWorx co-founder, Canadian sellers questioned the plan to work with Mato Creation.

Facebook exchange between HempWorx co-founder Jenna Zwagil and Canadian sales representatives.

"So let me get this straight," one Calgary-based HempWorx seller wrote in July, "we will have to not only buy a prescription card to sell but our customers will have to [buy] a prescription card to buy?"

"Do you have a better alternative?" Jenna Zwagil, a co-founder of HempWorx, wrote, "Feel free to inform the world on what your plans are to get this done. It's amazing how unappreciative people are."