Following the non-licensed gross sales scandal that crippled Bonify earlier this yr, one other Canadian cannabis producer has been hit with a non-compliant score from Well being Canada.
This time round an audit found that CannTrust Holdings Inc. (TSX: TRST; NYSE: CTST) produced cannabis in 5 unlicensed rooms, and that firm workers supplied purposefully inaccurate info to a Well being Canada regulator.
The unlicensed manufacturing happened in 5 rooms located on the firm’s Pelham develop facility. These rooms had been going by way of the licensing course of however hadn’t been permitted but.
Licensing was ultimately granted to every of these 5 rooms again in April, however unlicensed rising had already taken place for six months from October 2018 to March of 2019.
After the information broke, CannTrust’s shares dropped 21% as of Monday afternoon to a worth of $3.88.
Along with the non-compliant score criticism, Well being Canada has positioned a maintain on 5,200 kg of CannTrust’s dried flower product produced on the Pelham facility. The corporate is additional voluntarily holding one other 7,200 kg of product presently residing in a Vaughan facility after being produced within the non-compliant develop rooms.
Chief Govt Officer Peter Aceto issued this assertion in regards to the state of affairs:
Our crew has targeted on constructing a tradition of transparency, belief and excellence in each facet of our enterprise, together with our interactions with the regulator. We now have made many adjustments to make this proper with Well being Canada. We made errors in judgment, however the classes we now have discovered right here will serve us nicely transferring ahead.
In an interview with the Monetary Publish this morning, Aceto confirmed that among the product grown illegally in unlicensed rooms has already been shipped out to clients. Whereas what particular actions can be taken concerning these shipments is unclear, the corporate is now in touch with all provincial distributors to trace down the place they had been despatched.
He additional said the unlicensed merchandise meet all security and Good Manufacturing Course of requirements, and had gone by way of all the identical regular high quality testing as some other cannabis produced by CannTrust.
Whereas additional motion from Well being Canada and authorized challenges are anticipated to reach within the coming weeks, for now the corporate is retaining a set of exterior advisors for an impartial evaluation of compliance processes.