CannTrust Inventory Plummets After Audit Reveals Non-Licensed Rising

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Following the non-licensed gross sales scandal that crippled Bonify earlier this 12 months, one other Canadian cannabis producer has been hit with a non-compliant ranking 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 offered purposefully inaccurate data to a Well being Canada regulator. 

The unlicensed manufacturing passed off in 5 rooms located on the firm’s Pelham develop facility. These rooms have been going via the licensing course of however hadn’t been accepted but. 

Licensing was finally 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 value of $3.88. 

Along with the non-compliant ranking grievance, 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 at present residing in a Vaughan facility after being produced within the non-compliant develop rooms. 

Chief Government Officer Peter Aceto issued this assertion in regards to the state of affairs: 

Our staff has targeted on constructing a tradition of transparency, belief and excellence in each side of our enterprise, together with our interactions with the regulator. We’ve made many modifications to make this proper with Well being Canada. We made errors in judgment, however the classes we have now discovered right here will serve us effectively shifting ahead.

In an interview with the Monetary Put up this morning, Aceto confirmed that a few of the product grown illegally in unlicensed rooms has already been shipped out to clients. Whereas what particular actions shall be taken relating to these shipments is unclear, the corporate is now in touch with all provincial distributors to trace down the place they have been despatched. 

He additional acknowledged the unlicensed merchandise meet all security and Good Manufacturing Course of requirements, and had gone via all the identical regular high quality testing as every 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 unbiased overview of compliance processes. 

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