In March 2023, the CRA created an Illicit Income Audit Program to counter both money laundering and other illegal activity conducted by organized crime groups. CBC.ca reports that the program includes 80 auditors to target illegal businesses. Between April 2023-August 2023, the CRA shared that 90 audits were labeled as complete, with a total of $74 million discovered in unreported income, as well as $24 million taxes owed and $7 million penalties issued. The CRA describes Enns’ case as “unique,” and the Tax Court of Canada claims that Enns “deliberately structures his finances so that the government cannot determine the taxable income of his businesses and himself.

” The Minister of National Revenue initially confirmed a tax reassessment, which showed that $2.5 million was allegedly missing and unreported from between 2012-2014. Additionally, $654,000 in “gross negligence” penalties were issued to Enns. Enns appealed the decision two years ago, but there is currently no appeal date. The case targets Enns and 59147 Nova Scotia Ltd., which controls operations for the Grow Shop, an industrial park in Dartmouth, Nova Scotia. The business primarily sells gardening supplies and hydroponic equipment, while a different business that Enns owns is the Halifax Compassionate Club (a non-profit dispensary), as well as the Farm Assists Cannabis Resource Centre.

The CRA alleges that the Halifax Compassionate Club never filed any tax returns or any other documents required by non-profit businesses. Additionally, it claims that because Enns manages all businesses through “59147 Nova Scotia Ltd.,” the records are “unreliable.” “Enns attempted to structure his business affairs so that expenses are claimed, but revenue sources are either not reported or under-reported,” a government statement said in reply to Enns’ appeal. CBC.ca believes that Enns’ is being targeted because he was arrested on trafficking charges when police raided his cannabis businesses in 2013 and 2014.

According to Illicit Income Audit Program director general, Eric Ferron, auditors often use “indirect verification methods” to come up with income data. This includes analyzing bank and credit card records, and various assets (ex. a luxury vehicle) to determine evidence of business income through illegal methods. The CRA has the ability to seize future wages and assets, and also put a lien on a property. “It is difficult, but it is the right thing to do,” Ferron said. “At the end of the day, we want to promote tax fairness, and we also want to disrupt illicit financial flows.

People shouldn’t profit from illegal activity, and people should pay their fair share of taxes.” In the past, Enns has fought for medical cannabis patients access to medicine and improved legislation to protect and serve patients. As a result, his record includes numerous arrests for cannabis-related offenses. Enns told CBC.ca that the “many criminal proceedings” he has endured have made record-keeping difficult, but he’s working on updating all of his records. Additionally, he shared that his only asset is a 13-year-old Honda Civic.

“The CRA is basing its assertions on documents that were developed in the process of a criminal prosecution that was withdrawn by the Crown,” said Enns. “Not only were the numbers in the document artificially generated, but the document itself is being used improperly by the CRA.” According to CBC.ca, the CRA has used such methods to target illegal activity for almost 100 years. One example from 1926 shows the U.K. Judicial Committee of the Privy Council ruled that an Ontario “garage owner” was trafficking liquor and was forced to pay income tax on illegal sales.

In 2019, Enns’ dispensaries were raided by law enforcement, who seized 50 pounds of cannabis, numerous kilograms of extracts, edibles, and also cash. Later in October 2021, Enns defended himself in front of Judge Elizabeth Buckle, claiming that his rights were violated. In an interview with SaltWire Network on the same day, Enns explained his defense and the case’s conclusion. “Well, for the purposes of the application that was before the court today, it was a simple and straightforward section, a challenge where I made an argument that the actual information that was contained in the affidavit that the police used in order to go before a justice of the peace and request a warrant to search the business locations, was simply not sufficient, and did not contain any credible evidence that a justice of the peace could reasonably have used in order to justify the issuance of that warrant,” Enns said in the interview.

The judge ruled that law enforcement cannot use online resources such as Weedmaps to justify a search warrant, and the case ended. Read less