CannTrust Nailed for Selling Unlicensed Product

Marco Green
July 11, 2019

In an interview with the Financial Post, CannTrust chief executive officer Peter Aceto would not provide specifics on what exactly happened at its Pelham facility between October 2018 and March 2019 that resulted in Health Canada's seizure of 5,200 kilograms of cannabis planted in five unlicensed rooms. These rooms were constructed in accordance with regulations and Good Production Practices, and licenses were issued for each of the five rooms in April 2019.

The CannTrust Pelham facility has a total of 12 growing rooms. The hold may be lifted if Health Canada deems the company compliant with regulations, but until that decision has been made official CannTrust has put about 7500 kg of dried product from its Vaughan facility - grown in the unlicensed rooms - on a voluntary hold.

Shares of Vaughan, Ont. -based cannabis producer CannTrust are falling in Monday premarket trading after the company disclosed a non-compliance order it received from Health Canada for its Pelham cultivation facility, forcing the company to delay releasing thousands of kilograms worth of inventory.

"All product sold from the impacted rooms has passed quality control testing at Health Canada certified labs as well as CannTrust's own quality control processes and safety reviews", CannTrust said.

That being said, CannTrust has stated that with so much of its cannabis supply being held up right now (12,700 kilos to be precise), it will be hard to get any product to vendors.

"They will have to go to the open market to fill the shortage gap with little bargaining power, which means they could pay inflated prices or take inferior product which could lead to lost market share", he said in a note to clients.

In the long-term, there will be an impact on CannTrust's credibility, Tomkins added.

"Our team has focused on building a culture of transparency, trust and excellence in every aspect of our business, including our interactions with the regulator".

Health Canada also pointed to awry information shared by employees of the company. Ms. Kirk brings almost 20 years of quality and compliance experience from the pharmaceutical industry to CannTrust and her mandate is to lead the Quality and Compliance Department. Since joining the company in March 2019, she has hired and trained 17 quality and compliance professionals.

When asked if the product placed on hold would become a material loss for the company, a CannTrust representative declined to confirm and said further updates would be shared at a later time.

Even worse, the research firm went on to say that CannTrust might have exported some of its illicitly produced cannabis to worldwide markets, such as Australia and Denmark.

The company also said some of the product from these previously unlicensed rooms was distributed for sale. This information is all part of the site evidence package that all applicants must swear contains up-to-date, and accurate information.

Other reports by Click Lancashire

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