CannTrust Receives Cannabis License Suspension from Health Canada

CannTrust Shares Details About License Suspension Notice

Canadian investigators alleged this past summer that the Ontario-based company was producing thousands of kilograms of cannabis in unlicensed grow rooms.

Shares of CannTrust fell by another 14.5 percent on Tuesday in response to the news. CannTrust will now be barred from growing new lots or batches of cannabis and from selling or distributing any products, but will still be able to "cultivate and harvest existing lots of batches" as well as trim, mill and dry that product, the release said. But it can not propagate new lots or batches or sell or distribute cannabis.

The suspensions come after the health authority was tipped off by a whistleblower that CannTrust was growing illicit cannabis in multiple unlicensed rooms at its Pelham, Ont., greenhouse.

"Health Canada will continue to closely monitor actions taken by CannTrust Inc. and will re-assess the status of the company's licence as new information becomes available". It also in July hired a financial adviser to help explore a potential sale and other strategic alternatives for the company.

Roth analyst Scott Fortune wrote in a Wednesday note that the research firm views the suspension as a "fortunate outcome" for CannTrust at the moment, as regulators could have completely revoked its licenses. It has emerged that the company is going to be allowed to cultivate and harvest the batches of cannabis that now exist.

Robert Marcovitch, CannTrust's interim chief executive officer, said in an e-mailed statement: "CannTrust's paramount and urgent priority is to satisfy regulators that the company meets or exceeds all regulatory requirements so that the reasons for suspension no longer exist, we are in a position to resume operations and to regain the trust and confidence of our shareholders, patients, customers and partners".

After the investigation was revealed, CannTrust halted all cannabis sales, fired Mr. Aceto "with cause" and forced Mr. Paul to resign.

CannTrust laid off around 180 employees earlier this month, around 20 per cent of its workforce in relation to the regulation issues.

The Company's management and Board of Directors are reviewing the Notice with the Company's counsel and other advisors. These included measures to recover cannabis that was not authorized by CannTrust's licence, to control the movement in and out of the company's site, to improve key personnel's knowledge of and compliance with regulations, and a plan to improve inventory tracking, the company said.

The regulator said the company can respond to the notification within 10 business days to explain why the suspension is unfounded or provide information that Health Canada should take into consideration in its decision making.

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