$5,000 cash donation to PCs in 2018 came from bankrupt cannabis retailer, wife

A former grey market cannabis retailer who left behind a trail of unpaid bills, including taxes owed to the province, is declining to talk about substantial political donations he and his spouse made to the New Brunswick Progressive Conservative Party in 2018 and again in 2019.

"It's public information, but I still think my business is my business," said Hank Merchant about his political donations in a brief phone conversation with CBC News.

"I'm not going to make any comment."

Receipts on file with Elections New Brunswick show Merchant, 70, and wife Anne Marie, 67, each donated $2,500 in cash $5,000 in total to provincial Progressive Conservatives in July 2018.

Earlier this year, Anne Marie Merchant gave an additional $2,500 to the party.

The $7,500 in contributions over two years is one of the largest received by PCs from a single household during that time and came although both Merchants have been working through personal bankruptcies.

Each filed paperwork in 2017 showing they had little in the way of resources to pay substantial personal debts let alone become major political donors.

Records with the Office of the Superintendent of Bankruptcy Canada show the two had no bank deposits and were subsisting on a household pension income of just $1,600 per month when they filed financial statements in February 2017.

Despite personally owing creditors nearly $2.1 million, including $60,000 in unpaid federal and provincial taxes at the time of filing, the Merchants were found to be of such limited means they were required to pay just $150 per month toward their debts for a little over two years.

How the couple came up with $5,000 in cash in July 2018, while still in bankruptcy, to donate to Progressive Conservatives and a further $2,500 for another donation earlier this year is a mystery.

Dispensary raids

Prior to the legalization of cannabis in Canada, Hank Merchant was one of New Brunswick's largest cannabis retailers, selling through a chain of dispensaries called HBB Medical Inc. in Fredericton, Saint John and Moncton.

Operating in what he acknowledged was a legal grey area but police forces and the provincial government called illegal Merchant sold cannabis products to customers who claimed to have a medical need to manage pain, anxiety and other conditions.

"We're as legal as we can be in a grey zone," Merchant told CBC News in 2017. "Our clients would not even consider going into an environment where there's a lot of people into a recreational environment. They want to come into a discreet location and buy medical cannabis. It's about medicine. It's not about getting high."

Merchant ran into trouble in January 2017 when police in Saint John raided a number of dispensaries, including two HBB Medical locations, and arrested and charged several people working onsite.

One of the arrested HBB Medical staff members, William Caines, later told CBC News the location he worked in did between $4,000 and $11,000 in sales per day

Within one month of the Saint John raid, the Merchants filed for personal bankruptcy, listing several creditors. The largest, Equirex Leasing Corporation of Ontario a commercial equipment financing company was owed $1.6 million.

July 2018 donation

Despite the personal bankruptcies, HBB Medical itself continued to operate for more than a year although under increasing police pressure.

On July 4, 2018, with the legalization of cannabis three months away, the Fredericton police department finally warned HBB Medical it had 14 days to close its final outlet in that city or risk being raided and forcibly closed.

It was during that two-week period, with the Fredericton dispensary in its final days, the Merchants made their first two $2,500 cash donations to the PC Party.

The money could not legally have come from HBB Medical.

Political donations in New Brunswick are not permitted from companies directly or indirectly and by legislation individual donations have to come from the "personal property" of the donor.

Hank Merchant was not discharged from his bankruptcy until April 4, 2019, and Anne Marie sometime after that, so it is unclear what personal property could have financed political donations that large.

Rick Lafrance, Progressive Conservative party executive director, did not directly respond to a request for an interview about the donations but in an email said the party considers them to have been legally made.

"These contributions are under the $3,000.00 (per person) allowed by Elections NB," wrote Lafrance.

"We follow Elections New Brunswick Political financing Act."