CannTrust to destroy $77M worth of pot in bid to regain Health Canada's trust
CannTrust Holdings Inc. is planning to destroy approximately $77 million worth of cannabis as the beleaguered pot producer seeks to restore regulatory compliance.
In a press release issued on Thanksgiving Monday, CannTrust said it will not challenge Health Canada’s Sept. 17 decision to suspend the company’s sales and production licences. Instead, CannTrust said it “remains focused on working collaboratively and transparently with the regulator to address the company’s non-compliance matters.”
Those “non-compliance matters” first came to light in early July when CannTrust disclosed that it had run afoul of Health Canada due to unlicensed production at its Pelham, Ont. facility.
That was the spark for a devastating production scandal — replete with a whistleblower’s allegations of fake walls that were installed to shield illegal production from regulators, and internal documents obtained by BNN Bloomberg that suggested some CannTrust employees attempted to conceal black market cannabis seeds that were apparently brought into one of the company’s facilities last year.
Along the way, former CEO Peter Aceto was fired, Chairman Eric Paul was ousted, CannTrust hired a financial advisor for its review of strategic alternatives, and disclosed that “matters and parties” related to the company were under investigation by the Ontario Securities Commission’s Joint Serious Offences Team.
On Monday, CannTrust said it sent Health Canada an outline of its proposed remediation plan, which includes steps such as unspecified measures to recover unauthorized cannabis, a pledge to “improve key personnel’s knowledge of, and compliance with” regulations, and improvements to internal record-keeping.
The company said it expects to provide a detailed remediation plan to Health Canada by Oct. 21.
In conjunction with its remediation proposal, CannTrust said it is necessary to destroy approximately $12 million worth of biological assets and $65 million worth of inventory that wasn’t authorized under the company’s licence, including material that was returned by patients, distributors and retailers.
“CannTrust is confident that its detailed remediation plan will not only address all of the compliance issues identified by Health Canada, but it will also build a best-in-class compliance environment for the future. … Our goal is to meet and exceed Health Canada’s regulatory standard, and to rebuild the trust and confidence of our primary regulator, investors, patients, and customers,” said CannTrust interim Chief Executive Officer Robert Marcovitch in the press release.
CannTrust’s New York-listed shares rose 13 per cent to close at $1.04 Monday.
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