After a week of turmoil Canadian firm CannTrust Holdings has ceased cannabis sales as it launches a full internal investigation into its own ‘illegal grow rooms’.
The crisis started on Monday when Health Canada announced it had discovered the company was growing in unlicensed rooms at its Pelham facility in Ontario. Canadian newspaper The Globe and Mail reported the company used fake walls to ‘hide’ its cannabis from Health Canada.
It later emerged that CannTrust’s Danish partner Stenocare A/S said it had sold some of the illegal pot to its patients.
Unlicensed Exporters Face Jail
The Canadian Cannabis Act forbids the export of unlicensed cannabis and anyone found guilty could face jail, reported BNN Bloomberg. On Thursday CannTrust Holdings said in a statement that it has ceased sale and shipment of all cannabis products.
The company also said it planned to form an independent special committee to investigate the illegal grow rooms ‘in its entirety’.
Sherry Boodram, CEO of Toronto-based regulatory consulting firm CannDelta and a former Health Canada Inspector, told BNN Bloomberg the company had applied for licences to for the crop and the quality of the product was not an issue – just that it had been grown illegally.
Licence Suspension Threat
She said there had been previous examples on non-compliance by CannTrust and it could face a growing licence suspension. BNN Bloomberg’s David George-Cosh later reported that from April 2015 to March 2018, CannTrust was cited with 15 major, or critical observations made by Health Canada during site inspections at CannTrust locations.
It reported that some of the other infractions the company was found to be in violation of between 2015 and 2018 included security issues with storage vaults and mold in grow rooms.
Health Canada’s initial announcement said the Pelham facility had produced cannabis in five unlicensed rooms for a period of six months – from October 2018 to March 2019 – and as a result was found to be non-compliant under its regulations. It said it had seized more than five metric tons of CannTrust’s inventory.
CannTrust, which is listed on both the Toronto and New York Stock Exchanges, has seen its stock price plummet by almost 40% over the last week.