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A surprise Health Canada inspection has landed one of the country’s largest licensed producers in hot water.
On Wednesday, CannTrust’s stock plummeted following news that the company was growing cannabis in rooms yet to be approved by Health Canada.
Between October 2018 and March 2019, CannTrust says its approval applications for the rooms were still pending while the space was being used to grow cannabis.
However, Health Canada says CannTrust employees also provided “false and misleading information” to inspectors.
The Ontario Cannabis Store has since removed CannTrust’s products from distribution and is offering a refund to customers.
Health Canada also put approximately 5,200 kgs of CannTrust product on hold along with CannTrust voluntarily holding back an additional 7,500 kgs of product.
As a consequence for breaching regulations, CannTrust could potentially have its production license suspended or face fines up to $1-million.
Chief executive Peter Aceto said the nearly 13,000 kilograms of held back product represented the “majority” of its inventory and warned of product shortages ahead.
Company stock had fallen over three dollars on the TSX by Thursday afternoon.
With files from the Canadian Press.