CannTrust Stock Plunges On Audit Citing Non-compliance, Cannabis Inventory Being Held

  • CannTrust Stock Plunges On Audit Citing Non-compliance, Cannabis Inventory Being Held

CannTrust Stock Plunges On Audit Citing Non-compliance, Cannabis Inventory Being Held

Health Canada is now doing quality checks on the company's products, a process that is expected to take up to two weeks. Licences were issued for each of the five rooms in April 2019.

The CannTrust Pelham facility has a total of 12 growing rooms.

Improving the Quality and Compliance function at the Company has been a priority for senior leadership.

According to Aceto, Health Canada inspectors made a surprise visit to the Niagara facility in June and issued a report on the company's non-compliance on July 3. It went on for the period between October 2018 through to March 2019, and in addition, it has also been revealed that CannTrust employees had also given inaccurate information to Health Canada. The Company has also purchased 81 acres of land in British Columbia and expects to secure over 240 acres of land in total for low-priced outdoor cultivation which it will use for its extraction-based products.

At the moment, it's unclear whether there will be other legal actions taken against the company.

According to the producer, Health Canada placed an immediate hold on 5,200 kilograms worth of dried cannabis product.

Founded by pharmacists, CannTrust brings more than 40 years of pharmaceutical and healthcare experience to the medical cannabis industry and serves more than 72,000 medical patients with its dried, extract and capsule products.

The firm has a team working to source cannabis to fill supply gaps, Aceto said.

"Ultimately this will tarnish the relationship between CannTrust and Health Canada".

Investor John Mastromattei, who keeps a close eye on the cannabis sector but doesn't now own any CannTrust shares, says the move is a major hit to the company's reputation.

Canadian cannabis producer CannTrust is warning customers to expect product shortages after Health Canada said the company broke rules by growing cannabis in greenhouse rooms that didn't have a licence to operate at the time. Results are expected in 10 to 12 business days. "In our view, the CannTrust situation does not appear as dire as these scenario (s), and thus we believe the company should be able to maintain its LP status", wrote Miehm. Jefferies analyst Ryan Tomkins said the company had been disappointing in terms of its execution. The company said it is exploring options to mitigate these shortages. Even if the executives of CannTrust get off scot-free from this affair, it will have a lasting impact on the company's share price as well as future sales.

"The fact the company never spotted this, or indeed still doesn't know how it happened, is a concern", he said. "For us, this will make institutional investors think twice, and could also likely make it harder for CannTrust to attract high quality" partnerships with consumer-packaged goods companies.

CannTrust's stock lost 20 per cent of its value on Monday, and continued its sell-off Tuesday morning - within an hour of morning trading, the stock had already dropped a further six per cent.