CannTrust’s Vaughan cannabis facility found non-compliant by Health Canada

Marco Green
August 13, 2019

Forward-looking information and statements necessarily involve known and unknown risks, including, without limitation: results of Health Canada's investigation, including orders and compliance measures required by Health Canada and their impact on the operations and financial condition of the Company; the Company's implementation of remediation plans and related actions; regulatory approval; risks associated with general economic conditions; adverse industry events; loss of markets; future legislative and regulatory developments in Canada, the United States and elsewhere; the cannabis industry in Canada generally; and, the ability of CannTrust to implement its business strategies.

Last month, CannTrust said Health Canada had placed on hold about 5,200 kilograms of dried cannabis harvested in five unlicensed rooms in Pelham. Upon finding this out, the CEO, Peter Aceto was terminated "with cause", while the Chair, Eric Paul was asked to resign his position.

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Health Canada's probe could result in the suspension or termination of CannTrust's cannabis licences and fines up to $1 million.

The Ontario Securities Commission said earlier in the month it had launched a joint investigation with the RCMP to examine unlicensed growing at CannTrust's greenhouse.

Along with its licence, the fate of CannTrust's inventory is up in the air.

CannTrust is a federally regulated licensed producer of medical and recreational cannabis in Canada.

Analysts await CannTrust Holdings Inc.

The latest non-compliant order, issued after market on Friday, adds to company's problems, but does not come as a surprise. As far back as November, 2018 CannTrust officials had expressed concerns about regulatory breaches at its Vaughan facility.

Its the second recent instance where CannTrust was found by Health Canada to be operating in non-compliant facilities.

"PA2A-E are not licenced but we have moved the encapsulation equipment into them and will begin running it next week; PA5 has been modified and is not approved for storage but we are storing product in it", Mr. Lee added, referring to rooms at the Vaughan facility.

"We have retained independent consultants who have already started addressing some of the deficiencies noted in Health Canada's report".

Health Canada has told CannTrust that it's unable to provide any guidance about the timing or content of its decisions regarding the company.

US -listed shares of the Canadian grower, down 36 per cent in the past month after it suspended sales, fired its chief executive officer, disclosed a formal investigation by local regulators and said its results may have to be restated, fell another 26 per cent in early trading to $2.30.

Other reports by Click Lancashire

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