(Bloomberg) -- CannTrust Holdings Inc. slumped after a report executives knew the Canadian cannabis company was growing pot in unlicensed rooms well before before government regulators unearthed the violation.
The company’s U.S. shares tumbled more than 8% in pre-market trading on the Globe and Mail report which cited internal emails showing CannTrust Chairman Eric Paul and Chief Executive Officer Peter Aceto were informed about the breach about seven months before Health Canada raised the issue.
It’s the latest setback for the Vaughan, Ontario-based producer which has seen its shares plunge almost 50% since the company said July 8 that the federal regulator gave a non-compliant rating to its greenhouse in Pelham, Ontario, forcing it to halt sales of nearly 30,000 pounds of pot. The company was found to have grown the crop in five unlicensed rooms between October and March, and CannTrust employees were also found to have provided inaccurate information to the regulator.
The company has launched an investigation into the breach and told the Globe and Mail that it expects to complete it withing days. The company didn’t immediately respond to a request for comment.
It filed a response to Health Canada on July 17, the company said earlier this week, and is awaiting the regulator’s response. Aceto said regulators were also inspecting the company’s Vaughan facility in addition to its Pelham greenhouse.
Investors are weighing the risk of CannTrust losing its growing license, with sales and shipments of its products on hold.
To contact the reporter on this story: Michael Bellusci in Toronto at mbellusci2@bloomberg.net
To contact the editors responsible for this story: Brad Olesen at bolesen3@bloomberg.net, ;Jacqueline Thorpe at jthorpe23@bloomberg.net, Steven Frank
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