Statement of Facts : VCBC VS Dieter Macpherson

1. This statement of facts is written by Ted Smith, founder of the Victoria Cannabis Buyers Club, regarding the failure of Dieter MacPherson in his fiduciary duties as an employee and as president of the board of the VCBC, his unauthorized seizure of the club’s kitchen to set up a for profit business and what the club demands as compensation for this wrongdoing.

1. In October 2012, I turned my long-standing medical cannabis dispensary into a non profit society, passing my responsibilities as owner over to Mr. MacPherson in his roles as president on the board of directors and general manager of the dispensary.  At the time my partner, Gayle Quin, had already lost one breast from cancer and my attention gradually shifted towards caring for her.  

1. This was done shortly after Revenue Canada came after me for not collecting taxes, forcing me to declare bankruptcy against over $250,000.  Revenue Canada had been tipped off to the situation by the Victoria Police Department, after the 2012 lower court decision in the Owen Smith trial that ruled the law prohibiting cannabis extracts was unconstitutional. 

1. Almost immediately, Mr. MacPherson mismanaged the club’s resources and the club was unable to make its full payments of GST and employee deductions to Revenue Canada.  Mr. MacPherson made sure there was very poor record keeping done so no one on the board or staff could tell what was happening. For years everyone trusted he was making sure these payments were being made and no one on the board seemed too concerned about the lack of concise financial documents.

1. Since there were difficulties transferring large sums of money earned illegally to the government, the club was unable to obtain any type of bank account. Mr. MacPherson was instructed to create a shell company, which he called MacPherson Money Management, that was only supposed to be for club activities.  He has refused to share information from this account.

1. Around two years ago, the total owed got over $250,000 and Revenue Canada started to send letters to current and past board members informing them legal action will be taken if this sum is not paid.  Mr. MacPherson lied to the current and former board members about why this debt existed, claiming it was a mistake regarding the amount that I had declared bankruptcy against.

1. In May 2016, the board discovered this debt had been suddenly paid in full.  When the board and I confronted Mr. MacPherson, he admitted some of his mistakes and claimed the debt had been paid off by him personally.  He claimed he sold part of a website, Canlio.

1. The VCBC removed Mr. MacPherson from his position as general manager and he resigned from the board of directors in early June. His employment continued with the club as a consultant at his request, in part so he could remain president of the Canadian Association of Medical Cannabis Dispensaries. I took over as president of the board and Brandi Woods assumed his role as general manager.

1. In June of 2016, I was caring for Gayle at home in Cobble Hill, where she had been in palliative care in a hospital bed with cancer eating her bones away since Nov 2014. While I was caring for her, the board passed a motion to brand the products in honour of her, calling them GQ products.

1. Meanwhile the Owen Smith case was working its way to the Supreme Court of Canada, where it won a unanimous decision in 2015.  With a wide range of effective edible and topical cannabis products, the VCBC was poised to dramatically increase sales online and to other dispensaries.

1. It has always been the club’s dream to have a commercial space to operate the kitchen from.  With a sudden burst in the number of dispensaries in Victoria, Mr. MacPherson began proposing we work with as many people as possible to create a shared commercial kitchen space.  After contacting other local dispensaries, he informed us that TREES was the only dispensary willing to cooperate with us.

1. Early in 2016 we were informed that a commercial space had been secured and the landlord was doing renovations to prepare for us.  Board minutes clearly show Dieter stated the club was the owning body of this new bakery.

1. While I was not on the board at the time and very focused on caring for Gayle, I was doing my best to keep abreast of what was happening.  At a certain point Mr. MacPherson changed his story and claimed investors were putting the money into the bakery.  

1. When the new bakery began operating, the VCBC was still paying the wages of the staff that had been employed with us for some time, Jason Balaam and Sean Bird.  We still gave them staff prices and other benefits for several weeks before they started to be paid by the new company, BAKED. The staff at BAKED continued to get many benefits normally only available to the staff of the VCBC for over a year after the transition.

1. To start BAKED, Mr. MacPherson took the recipes, baking products, tables, mixer, kitchen equipment, fridge, cleaning tools and other items the VCBC had used in its bakery since it had been started its own kitchen in 1998.  At first all of the products produced by BAKED used the GQ label but soon products using the BAKED label began appearing.

1. We were told by Mr. MacPherson that it was best to start a new business from scratch rather than use the VCBC as the owner and that it was easiest for him to retain ownership of BAKED on the club’s behalf.  

1. Immediately BAKED proudly stated in literature and on its website that it was the oldest operating cannabis bakery in Canada, claiming the VCBC kitchen was its predecessor.  These claims were made to profit from the very hard work we did developing products and fighting for patient’s rights to use cannabis extracts. These claims still exist on the website and other material produced by BAKED as they are proud they now have the VCBC kitchen.

1. After we confronted Mr. MacPherson about what was happening with Revenue Canada and I became president, it became my responsibility to negotiate with BAKED and take ownership of the club’s shares in my name on the club’s behalf. 

1. We were suddenly told that the club only owned 20% of BAKED but given the investment made by other partners we were willing to settle for that at the time.  We were also told that the VCBC would receive free products for as long as BAKED could afford to do so but that there was a possibility in the future that the VCBC would have to pay BAKED some of the costs of production.

1. At my insistence a meeting was held with myself, Mr. MacPherson, Mr. Balaam, Dadmehr Naimi (part owner of TREES and BAKED) and Brandon Wright, (manager and part owner of BAKED).  At that meeting I was told a written agreement would be produced by Mr. MacPherson that would confirm that: 

-20% of BAKED had been transferred to my name, or was in the process of being transferred.

-the VCBC was to receive all products for free, unless BAKED was unable to afford to continue to do so, at which point we would pay for part of the cost.  This does not include cannabis and hash that is used in the cannoils and other products, which the VCBC would continue to supply.

-myself, or another delegate of the VCBC, would be given full and unfettered access to all financial documentation of BAKED.

-as the VCBC delegate working in the bakery, Mr. Balaam was to be given full control over the recipes and ingredients used in the GQ products received by the club, as well as veto power on any potential employees.

21) After months of requesting this agreement be printed and signed by all parties and the shares of BAKED transferred to my name, nothing was done.  It was during this period that Gayle passed away and our entire organization was in a deep state of grief.

22) At a certain point I took it upon myself to create a google document to outline the agreement.  However, I did not print or make another copy of the agreement and Mr. MacPherson has made the document irretrievable in the meantime.

23)  In January 2017, I broke down in despair and quit cannabis activism after 21 years of successful advocacy, as my heart was broken and my body starting to wear.  

24) A few months after I quit, the VCBC received a letter from BAKED demanding around $40,000 for all of the product the club had been receiving since the beginning.  The club was told that unless payments on this sum started to be made, no more products would be forthcoming.

25) After some negotiating, the total amount was brought down to around $20,000, in part because since BAKED opened the staff were received some cannabis every day as part of their benefits.  One of the benefits of working at the VCBC is a small amount of cannabis every day and since we were getting free products it seemed reasonable to continue this practice even after realizing the BAKED staff did not work for us anymore.

26)  Mr. Balaam was fired from BAKED shortly after that letter was written.  Mr. Bird assumed the role of our liaison.

26) In the first year of operations BAKED gradually became slower in its response to orders made by the VCBC, if the full order was ever filled at all.  Many days the club went without cookies or other specialty products our members were unable to find elsewhere.

27) After Mr. Balaam was fired and the club was forced to start back-paying for the cannabis products and paying for any products that actually did get made, the delivery of goods after purchase orders were made became even more dismal.  Weeks would go by with the members having no cookies at all, after years of choices between various fresh kinds.

28) Feeling helpless, the staff and board continued to make payments until only a few thousand of current debt was remaining.  

29) By the fall of 2017, the VCBC was in a desperate state.  It had a debt of $100,00 that was growing every month. In the previous year Mr. MacPherson’s abrupt absence, Gayle’s death, the loss of the kitchen and my resignation had fractured the foundations of the organization.  In Sept, 2017, I rejoined the VCBC and began putting the organization back on track.  

30) Clearly in the club’s dealings with the company, Mr. MacPherson has remained owner of at least some of the shares of BAKED, which should belong to the VCBC as he had agreed he was acting as the club’s representative and that any shares in his name were owned by the VCBC.  If this case is to be seen by a judge, we will argue that all BAKED shares, or the equivalent value of them, owned by Mr. MacPherson now or in the past belong to the VCBC.

31)  This is an important point because it also seems certain that Mr. MacPherson did not sell shares of a website to pay the Revenue Canada debt, but he appears to have sold the the club’s share of BAKED for around $300,000 to pay it.  This information comes from the staff of BAKED and since the website Canlio has gone dead since it was supposedly sold, there is no doubt the money came from somewhere else.

32) It would be exceptionally difficult to account for the lost income the VCBC has experienced due to a lack of products over the last two years.  While the physical and mental suffering of the patients is even more difficult to measure, we cannot go without mentioning that. The staff were also traumatized by hearing story after story of how much people were suffering as a result of a lack of products they were not able to find elsewhere.

33) Moreover, the club has lost massive corporate opportunity by having BAKED totally take over any possible clients of its product line.  Many of the clients of BAKED trust them and purchase from them based on what they proudly declare to be our predecessors.

34) The fact that BAKED was profiting from selling GQ products for a considerable amount of time, though they never asked Gayle’s for permission in person or in writing, is distressing.  Using the good name of a dying cancer patient to profit in a stolen bakery might not be criminal but it is wrong.

35) We estimate that the VCBC has lost about $2,500 a month for a two year period from lower of sales to its members due to lack of products.  

36) We estimate the VCBC has lost about $2,500 a month over the last two years in profit from sales to other dispensaries.  

37) Everything BAKED sells is to other dispensaries.  BAKED would not be in existence if Mr. MacPherson was not being paid salary by the club as manager during the time it was being founded and any profit BAKED made in the last two years is profit that would have possibly been earned by the VCBC if our kitchen was not taken away.  

38) After years of Mr MacPherson not acting in the best interests of the society, he took advantage of the corporate opportunities earned by the VCBC to set up a for profit business using the club’s assets, reputation, employees and recipes.  He was negligent in his fiduciary responsibilities to the VCBC by refusing to draft any agreement between BAKED and the VCBC when he was setting up his company, or after he was removed from his position as manager of the VCBC.  

39) His failure to protect the best interest of the club in favour of his own economic goals has cost the VCBC much more than can be financially compensated. He did not act in a reasonable manner while managing the VCBC, rarely taking the proper due care and diligence expected of someone with his skills in a clear attempt to personally profit from the hard work of others.

40)  Recently it has come to our attention that BAKED has sold for a reported $4.4 million dollars.  This would mean the club’s stake in the club, 20%, would be worth $880,000. We demand the $880,000 for our share of BAKED, plus $60,000 for lost sales to other dispensaries.  

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