fbpx
QQQ
-2.49
316.84
-0.79%
DIA
-2.00
312.11
-0.64%
SPY
-2.91
381.49
-0.77%
TLT
+ 0.60
150.62
+ 0.4%
GLD
-2.07
175.30
-1.19%

CannTrust Plummets 25% After Non-Compliance Ruling From Health Canada

August 12, 2019 8:42 am
Share to Linkedin Share to Twitter Share to Facebook Share to Print License More
CannTrust Plummets 25% After Non-Compliance Ruling From Health Canada

Shares of cannabis company CannTrust Holdings Inc (NYSE:CTST) fell 25% early Monday after the company said it accepts a new negative Health Canada ruling.

What Happened

CannTrust said in a press release that it failed a Health Canada inspection during the period of July 10-16. The company said it accepts the findings and actions to fix its wrongdoings are underway.

Health Canada's finding non-compliance was based on the following observations made during an inspection, according to CannTrust: 

1. Five rooms were converted from operational areas to storage areas and were used for storage since June 2018 without the regulatory body's approval.

2. The company constructed two new areas without approval, and one of the areas was used to store cannabis as of November 2018.

3. A lack of security controls at the manufacturing facility.

4. A lack of quality assurance investigations and controls.

5. Standard operating procedures that do not meet regulatory requirements.

6. Missing documents resulted in Health Canada's inability to complete an audit.

Benzinga's Cannabis Capital Conference heads to Detroit on Aug. 15 — click here to learn more!

Why It's Important

CannTrust was on the receiving end of a concerning Health Canada ruling in early July that said the company was producing cannabis in multiple unlicensed rooms. That scandal resulted in the ouster of CEO Peter Aceto with cause and the resignation of board chair Eric Paul.

Under a new leadership team led by interim CEO Robert Marcovitch, the company said it has started the process of investigating and fixing wrongdoings.

"We are continuing to work hard to regain the trust of Health Canada, our patients, shareholders and partners," the interim CEO said in a statement. 

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

What's Next

CannTrust said it is working on a "robust remediation" proposal to Health Canada under the supervision of a Special Committee.

Health Canada has advised CannTrust that it is unable to offer investors guidance on the timing or content of decisions concerning the company, according to CannTrust. 

CannTrust shares were down 27.44% at $2.30 in premarket trading Monday. 

Related Links:

More Bad News For CannTrust As Auditor Withdraws Reports

The Week In Cannabis: CannTrust Rallies Unexpectedly, Josh Kushner And Shane Victorino Join The Industry, And More

Posted-In:

Cannabis News Markets

Related Articles

Michigan Cannabis Sales Near $1B In First Year Of Adult-Use Sales

Cannabis sales in Michigan spiked during December, bringing the total to $984.6 million for 2020. read more

These 3 US States Could Legalize Weed In 2021

This article by Louis O'Neill was originally published on The Green Fund, and appears here with permission. read more

French Energy Firm Backs Hemp-Fueled Gas Plant With $23M

French energy company Qairos Energies is financing a project that will use locally grown hemp for the production of hydrogen and methane, according to HempToday. read more

Jay-Z Touts 'End Of Cannabis Prohibition' As Roc Nation Finalizes SPAC Deal With Caliva, Left Coast Ventures

A consortium made up of CMG Partners Inc., Left Coast Ventures Inc. and Shawn Carter (Jay-Z) —with his company Roc Nation — has finalized its previously announced transaction with Subversive Capital Acquisition Corp. (OTCQX: SBVCF). read more

Village Farms Announces $135M Registered Direct Offering

Village Farms International Inc. (NASDAQ: VFF) (TSX: VFF) has raised some $135 million through a direct offering of about 10.9 million shares. Each share at the offering has a price target of $12.40. read more