Cannabis traffickers used cryptocurrency, 'barrels of honey or maple syrup' to cover tracks

Cannabis traffickers used cryptocurrency, 'barrels of honey or maple syrup' to cover tracks

Man, 39, obtained grow-op licence through fraud to produce 'vast amounts' of illicit cannabis, police say.

A 39-year-old Manitoba man and half a dozen others were arrested this summer and fall in connection with drug trafficking and money laundering schemes that involved cryptocurrency — along with smuggling cannabis concentrate in and out of the country using barrels of honey and maple syrup, police say.

James Robert McGirr, from the rural municipality of Springfield — just east of Winnipeg — faces charges linked to his alleged role in several "high-level drug trafficking rings," said RCMP intelligence officer Insp. Joe Telus.

The charges follow a pair of related RCMP investigations, beginning with one dubbed Project Divergent, which launched in 2018 and led to the arrest of at least 20 people in early 2022.

"The inroads made in that project opened up avenues into other drug networks, kick-starting Project Decrypt," Telus said during a news conference in Winnipeg on Tuesday.

That second investigation led police to believe McGirr was "growing and selling vast amounts of illicit cannabis ... through a criminal network, and then he was converting that ill-gotten cash into cryptocurrency to fund his lifestyle and other criminal enterprise," said Telus.

Project Decrypt, started in April 2021, focused on the illegal trafficking of large amounts of cannabis.

It led investigators to McGirr, whom they accuse of obtaining a Health Canada licence for a micro-grow operation through fraudulent means so he could grow "vast amounts" of cannabis. 

RCMP also allege he got his hands on legitimate personal Health Canada medical licences under the names of associates as a front for then supplying cannabis he was growing to criminal networks.

McGirr was also laundering profits by converting cash into cryptocurrency and helping others do the same, RCMP said.

An RCMP spokesperson said there has been a rise in fraud and Canada Revenue Agency scams in Manitoba associated with cryptocurrency.

$6M in drugs, proceeds seized

In June and August of this year, police searched 11 properties — eight in Winnipeg, along with properties in the southern Manitoba communities of Sunnyside and Navin and the RM of Springfield — where they found $6 million worth of drugs and proceeds of crime, Telus said. 

RCMP said an estimated $2 million worth of cannabis was recovered and $3 million in property was seized, as well as seven guns, $15,000 in cash, and $203,000 worth of clothing, jewelery and other lifestyle items.

Another $700,000 worth of drug and cryptocurrency equipment was seized, including a bitcoin ATM machine, RCMP said.

Seven people, including McGirr, were arrested from June to September.

McGirr faces five charges under the Criminal Code — fraud over $5,000, identity fraud, possession of property obtained by crime, laundering proceeds of crime and false pretences — and five under the Cannabis Act.

Five of the six others arrested are charged under the Criminal Code or Cannabis Act.

All were released on a promise to appear in court. None of the charges have been proven in court.

Charges against a sixth associate, whose property contained a grow op, were stayed after he died.

The Decrypt and Divergent investigations show "criminal networks feed off each other and are interconnected," Insp. Telus said.

Health Canada security concerns

McGirr's business, Elevated Prairies, was initially registered under a different name in 2018 with him listed as director, according to court documents filed in Manitoba Court of King's Bench in June of this year.

In March 2019, that company applied to Health Canada for a commercial cannabis licence with McGirr to be listed as "master grower," among other titles.

By January 2021, Health Canada refused to provide a security clearance to him "on the basis that he has current family members with links to organized crime, specifically drug trafficking activities," according to the court documents.

Elevated Prairies responded by removing McGirr's name from the application in summer 2021 and appointing a family member in his place as the one who would oversee the business. That filing also suggested McGirr's role would be reduced to "general consultant" advising on development of the legal operation, growing techniques and marketing, the documents say.

Elevated Prairies reapplied for a licence in May 2022, with another person named as director — the same man who had charges against him stayed when he died sometime following the RCMP raid this summer.

Health Canada approved that application in February 2023 for the operation of a micro-cultivation cannabis operation.

But court documents say McGirr retained a "high level of control over decisions made by the company."

An undercover officer purchased multi-kilogram quantities of cannabis from members of the business throughout the course of the investigation, RCMP said.

In one exchange, McGirr told the officer he grew up to 150 pounds (nearly 70 kilograms) a month and stated he smuggled "[cannabis] concentrate into and out of the country via barrels of honey or maple syrup," the court documents state.

Police seized around 1,400 cannabis plants during seizures from two properties during June raids, the court documents say.

Health Canada is reviewing details of the investigation.

A spokesperson said commercial cannabis licence applicants are subject to an "in-depth security clearance process" similar to screening processes associated with other "areas of sensitivity or national importance."

Regulations also require any other staff or business partner associated with the primary licence holder to also clear a security check, the spokesperson said in a statement.

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Region: Manitoba

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