CannTrust Plummets Again After Voluntarily Halting Sales

Marco Green
July 13, 2019

"I think that a license suspension is possible", said Charles Taerk, chief executive officer of Faircourt Asset Management, which runs the cannabis-focused Ninepoint Alternative Health Fund. Taerk reduced his holdings of CannTrust to less than 1 per cent of his portfolio after the company's last quarterly earnings report, and sold the remainder of his position on Tuesday.

CannTrust is under scrutiny by Health Canada after it was found on Monday that the Vaughn, Ontario-based company grew marijuana at its Pelham, Ontario, plant when 5 of its 12 grow rooms had not yet been licensed. On Friday morning, CannTrust announced it was halting all cannabis sales and shipments while Health Canada reviews its processing plant in Vaughan, Ontario. As a part of that announcement the company said it volunteered that there may be storage problems at the Vaughan facility.

CannTrust's voluntary withhold on gross sales and shipments is liable to remaining into gradual July "at a minimum", stated Eight Capital analyst Graeme Kreindler, who downgraded the stock to promote from fair and within the reduction of his tag target to $4 from $6. CannTrust also stated that the impact on its future financial results is undetermined. "CannTrust is working closely with the regulator through the review process and expects to provide further detail of the duration of the hold and other developments as they become available".

The company also announced a formation of a Special Committee of the Board of Directors for the objective of a thorough investigation of the situation. "The Special Committee is comprised of independent members of the Board of Directors".

CannTrust said it had accepted Health Canada's non-compliance finding and had taken actions to ensure current and future compliance. 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 company said also it has placed a voluntary hold on about 7,500 kilograms, or 8.3 tons, of dried cannabis at its Vaughan manufacturing facility that was produced in the previously unlicensed rooms.

Alberta is placing an unspecified amount of CannTrust products on hold as a precautionary measure, officials said, pending an investigation by Health Canada into whether cannabis from unlicensed facilities is safe for consumption.

Other reports by Click Lancashire

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