Cannabis-producer-in-trouble CannTrust Holdings Inc. said Monday it will be destroying up to $77 million worth of cannabis plants and inventory in an effort to reinstate its producing licence.
It is the latest news from the Vaughan, Ont.-based cannabis producer whose licence was suspended in September by Health Canada after the agency found weed was grown in unlicenced rooms.
Without its licence, CannTrust cannot produce or sell cannabis, but it can cultivate and harvest the plant.
Turning Things Around
Health Canada set out measures for CannTrust to regain its licence after it was suspended, which include recovering the unauthorized cannabis that was produced and ensuring the company only produces and distributes authorized cannabis.
In a news release, the company said it is necessary to destroy around $12 million of cannabis plants and $65 million worth of unauthorized inventory to meet these measures.
CannTrust’s U.S.-listed shares rose 24 per cent after the announcement.
“The destruction process will allow the Company to free up much-needed capacity to both implement remediation measures and store material that has been grown and processed in accordance with the Company’s license since April 5, 2019,” the company said. “The destruction of the impacted inventory is both an essential and integral part of CannTrust executing its remediation plan, as well as addressing Health Canada’s remediation expectations.”
CannTrust was first found in July to be growing cannabis in five unlicensed rooms in its 12-room Pelham, Ont., facility. Then later, the company’s second facility in Vaughan, Ont., was found non-compliant by Health Canada.
As a result, the company suspended all sales of its cannabis, fired CEO Peter Aceto, asked chairman Eric Paul to resign, and created a special committee to probe the regulation infringements.
Now it is destroying its unauthorized cannabis, some of which was returned from patients, distributors and retailers, the company said.
CannTrust Moving Foward
CannTrust will provide a detailed plan to Health Canada on how it will move forward on or before October 21, 2019.
“CannTrust is confident that its detailed remediation plan will not only address all of the compliance issues identified by Health Canada, but it will also build a best-in-class compliance environment for the future,” interim CEO Robert Marcovitch said. “We have already made significant progress in these efforts. Our goal is to meet and exceed Health Canada’s regulatory standard, and to rebuild the trust and confidence of our primary regulator, investors, patients, and customers.”
CannTrust has become a warning for how a major player in the new cannabis industry can fall, but it is not the only Canadian cannabis company that has run into trouble with Health Canada.
In August, B.C.-based Evergreen Medicinal Supply’s licence was suspended due to violating provisions in the Cannabis Act, and Winnipeg’s Bonify Medical Cannabis also had its licence suspended due to claims it acquired cannabis from illegal sources.