CannTrust has put a hold on all of its cannabis sales and shipments after Health Canada found some of its growing facilities were not compliant with their policies, sending CannTrust’s stock crashing.
The company announced the voluntary hold on Thursday, saying it is a “precaution” as Health Canada reviews its Vaughan, Ont., facility.
The hold came into effect at 11:59 p.m. on July 10.
On July 8, CannTrust revealed that Health Canada found cannabis was grown in five unlicensed rooms in its Pelham, Ont., facility. Health Canada also said they were given inaccurate information from CannTrust employees.
Health Canada put 5,200 kg of CannTrust’s cannabis stock on hold, while the company put an additional 7,500 kg on hold, adding up to the “majority” of the company’s inventory, according to CEO Peter Aceto.
CannTrust said cannabis was grown in the five rooms from October 2018 to March 2019 while Health Canada’s licenses were pending. Licenses were eventually issued for the rooms in April 2019.
Former CannTrust employee Nick Lalonde revealed last week that he was asked to put up fake walls to obscure thousands of unlicensed plants in photos submitted to Health Canada, according to The Canadian Press.
Lalonde says he notified regulators after he left the company in May.
CannTrust did not say how long the hold on all of its stock will last but it is working closely with Health Canada during the review process.
The company has appointed a special committee of the board to investigate the matter.
More companies quarantine CannTrust stock
Since the news broke, other companies have also put their CannTrust cannabis inventory on hold.
One company is CannTrust’s Danish partner, Stenocare.
Stenocare said in a statement on Thursday that it received additional information from CannTrust that was contrary to what the company first told them, causing them to quarantine more stock. The company said it will likely cause a shortage of medical cannabis products in Denmark.
The Ontario Cannabis Store, Nova Scotia Liquor Corporation and Alberta cannabis authorities also put a hold on selling CannTrust products affected.
CannTrust’s shares have dropped significantly since the news broke on Monday.
CannTrust’s shares went down 13 percent on Friday to $3.60 a share on the Toronto Stock Exchange — a 48 percent drop from earlier in the week and close to half the closing price of $6.46 the previous Friday.
“At this time, the impact of these matters on CannTrust’s financial results are unknown until the regulatory review process is complete,” CannTrust said on Thursday.