B.C. company sanctioned by U.S. Treasury Department wants Health Canada licences back

Deputy Treasury Secretary Wally Adeyemo speaks at the Justice Department, Jan. 18, 2023, in Washington. A chemical firm based in Port Coquitlam, B.C., claims Health Canada wrongfully cancelled its licences to make natural health products after being sanctioned by the U.S. Treasury Department for alleged involvement in importing precursor chemicals used in illicit drug production. THE CANADIAN PRESS/AP, Nathan Howard

A chemical firm based in Port Coquitlam, B.C., claims Health Canada wrongfully cancelled its licences to make natural health products after being sanctioned by the U.S. Treasury Department for alleged involvement in importing precursor chemicals that could be used in illicit drug production.

The U.S. Treasury Department announced sanctions against Valerian Labs and its owner Bahman Djebelibak, who goes by Bobby Shah, in October 2023, and five days later Canada suspended and then cancelled Valerian's licences to make health products.

Valerian is now taking Health Canada to Federal Court, claiming in judicial review applications that the Canadian actions were solely based on a U.S. Treasury news release alleging it was involved in "the international proliferation of illicit drugs."

Deputy Secretary of the Treasury Wally Adeyemo had said in a statement at the time that the targets of the sanctions included a China-based network involved in the manufacturing and distribution of fentanyl and "other substances that take thousands of American lives each year."

Health Canada's Office of Controlled Substances also revoked Valerian's registration and certificate under the agency's "Precursor Control Regulations," which it says "provide a regulatory framework that allows Canada to fulfil its international obligations with respect to the monitoring and control of precursors used in the production of illegal drugs."

A Health Canada guidance document defines precursors as "chemicals that are frequently diverted from legitimate activities to the illegal manufacture of drugs."

Valerian Labs says the Health Canada decisions were unreasonable and unfair, having relied on an uncorroborated "foreign press release."

The U.S. Treasury Department's Office of Foreign Assets Control named several China-based companies in the sanctions announcement, including Jinhu Minsheng Pharmaceutical Machinery Co., which sells equipment and materials allegedly used in the production of counterfeit oxycodone pills.

The department's statement said Valerian Labs was a "major customer" of Jinhu Minsheng, receiving shipments of methylamine hydrochloride — which it called a precursor used to produce methamphetamine and MDMA.

Reached by phone and text message, Shah denied allegations related to the drug trade but acknowledged buying the chemical.

"I have bought Methylimine HCL, I have bought machinery," he wrote in a text message.

His "only mistake" he wrote, was that he "didn't just procure. I have them as commodities on my inventory that I offer as a chemical vendor."

He said he had been instructed by his lawyer to "not engage" with The Canadian Press, and said he did not consent to the use of his remarks. He was told an off-the-record interview needed to be agreed upon from the outset.

Valerian's applications filed Sept. 13 in Federal Court in Vancouver say Health Canada “has not set out any justification as to why the press release provides reasonable ground to believe that a suspension is necessary to prevent injury to the health of purchasers or consumers of products manufactured by Valerian Labs.”

A Health Canada spokesperson said no one was available for an interview about the company's licence cancellations, and the agency would not comment on ongoing litigation.

In a written statement, Health Canada said its "top priority is protecting the health and safety of the people of Canada."

"The department is committed to verifying that health products manufactured and sold in the Canadian market are safe, effective and of high quality. When there is information that could give rise to health and safety risks, Health Canada will determine if compliance and enforcement action is required and communicate the risks to the public, if warranted."

Company registration records show Valerian Labs used to be registered in B.C. under the name Hollywood Vape Labs, and court records show he and his former wife, Ramina Shah, faced a civil forfeiture lawsuit from the B.C. government, but the case was dropped.

In 2021, a B.C. Provincial Court judge found police had breached the couple's Charter rights against unreasonable search and seizure in a cheque fraud investigation.

Ramina Shah was murdered in January 2022, stabbed to death in a Coquitlam parkade, and the Integrated Homicide Investigation Team said in a written statement it could not comment on an "active ongoing investigation."

The U.S. Department of the Treasury did not respond to a request for comment on the sanctions against Valerian Labs.

This report by The Canadian Press was first published Sept. 27, 2024.