Beleaguered cannabis company CannTrust Holdings Inc. (NYSE: CTST) shares were falling 10% in early trading after the company announced it placed a hold on product sales. After the market closed on Thursday, the company said it would voluntarily “hold on sale and shipment of all cannabis products as a precaution while Health Canada visits and reviews its Vaughan, Ontario manufacturing facility.”
Earlier this week CannTrust admitted that a Health Canada audit found that the company was growing cannabis in five unlicensed rooms in its Pelham facility and inaccurate information was provided to the regulator by CannTrust employees. As a part of that announcement the company said it volunteered that there may be storage problems at the Vaughan facility. It seems this decision to stop sales is related to Health Canada heading over to that facility to review its compliance with the rules.
The stock closed at $4.94 on Friday, July 5. It was lately trading at $2.76 on news that all sales have been halted.
The company said that all medical sales made through customer service or through the e-commerce site were stopped as of midnight July 10. The company said it is working with regulators as they review the company’s grow facility. CannTrust also stated that the impact on its future financial results is undetermined. In addition, the said in a statement that a Special Committee of the Board of Directors had been established. “The Special Committee is comprised of independent members of the Board of Directors. The purpose of the Special Committee is to investigate this matter in its entirety,” read the statement.
Unlicensed Grow Rooms
CannTrust said it had accepted Health Canada’s non-compliance finding and had taken actions to ensure current and future compliance. The company stated that the growing in the unlicensed rooms took place from October 2018 to March 2019 during which time CannTrust had pending applications for these rooms with Health Canada. These rooms were constructed in accordance with regulations and Good Production Practices, and licenses were issued for each of the five rooms in April 2019. There are 12 rooms in total at the facility.
Health Canada has apparently placed a hold on inventory which includes approximately 5,200kg of dried cannabis that was harvested in the previously unlicensed rooms in Pelham until it deems that the company is compliant with regulations. In addition, CannTrust said it has instituted a voluntary hold of approximately 7,500kg of dried cannabis equivalent at its Vaughan manufacturing facility that was produced in the previously unlicensed rooms.
Patients and consumers who have questions about CannTrust products can contact the Company’s customer care team at [email protected] and 1-855-RX4-CANN.