Shares in one of Canada’s largest cannabis producers have plummeted after the country’s regulator found faults with its production processes.
Health Canada pulled Ontario-based CannTrust up on the spot after encountering unsatisfactory standards – less than a month after freezing the sales of tonnes of cannabis from another CannTrust facility.
Company shares, listed in the US earlier this year, fell by 36% since the first suspension. The listing has now fallen a further 26% to just $2.30.
At the time, Health Canada discovered unlicensed cultivation. CannTrust responded by jettisoning Chief Executive Officer Peter Aceto. Chairman Eric Paul resigned at the same time.
CannTrust’s interim CEO – Robert Marcovitch – has vowed to see the new regime conform to the wishes of the regulator after the firm’s Vaughan factory received a non-compliant rating.
“We are continuing to work hard to regain the trust of Health Canada, our patients, shareholders and partners,” he told Canada’s Financial Post.
“We will take whatever remedial steps necessary.”
The regulation issue relates to an inspection in July which discovered five rooms had been converted to storage areas without regulatory approval. Inspectors also noted unapproved construction as well as inadequate quality assurance. Several documents required by Health Canada were found to not have been updated correctly.
The multi-million dollar operation, which is currently under investigation by the Ontario Securities Commission, is believed to be looking into several options. One of those options is believed to be selling the company.
Alarmingly, CannTrust officials say they may have to restate some of the firm’s historical financial statements as well as further delay its now overdue second-quarter statement and six-month results.