Sep 6, 2019

CannTrust lays off 20% of staff after pot regulatory problems

CannTrust a 'black cloud' hanging over cannabis industry


Security Not Found

The stock symbol {{StockChart.Ric}} does not exist

See Full Stock Page »

VAUGHAN, Ont. - An Ontario cannabis producer is laying off about 180 people following repeated problems with both its product and how it has been produced.

“We have made the extremely difficult decision to restructure our workforce to reflect the current requirements of our business,” said Robert Marcovitch, interim head of CannTrust Holdings.

The layoffs amount to about 20 per cent of the company's workforce.

Last month, CannTrust disclosed the Ontario government's cannabis retailer said it would return almost $3 million worth of cannabis to the company after determining that some of the products didn't live up to the terms of its supply agreement.

The move by the province's crown corporation in charge of wholesale distribution and online pot retail was the latest setback for the cannabis producer, which continues to be under investigation by Health Canada.

In early July, CannTrust disclosed the federal regulator's findings that the company was growing cannabis in unlicensed rooms in its greenhouse in Pelham, Ont.

Health Canada placed a hold on CannTrust's inventory amounting to approximately 5,200 kg of dried cannabis. The company also instituted a voluntary hold of approximately 7,500 kg of dried cannabis equivalent.

CannTrust later voluntarily suspended all sales and distribution of its products as a precaution while regulators investigate its Vaughan, Ont.-based manufacturing facility.

Last month, the company said Health Canada notified CannTrust that its Vaughan facility was rated as non-compliant as well. CannTrust also said in August that the Ontario Securities Commission had opened an investigation into issues around the alleged unlicensed growing at its Pelham greenhouse.

CannTrust has noted that Health Canada has not ordered a recall on any of the company's products.

The company said it is taking steps to solve its regulatory problems.

A board committee is looking into the extent of the non-compliance and guiding efforts to fix it. Both its chief executive officer and board chairman have been replaced.

Shipments of all cannabis products have been stopped and the company said it is developing a plan to comply with Health Canada requirements.

Other provinces have said they'll wait for the results of Health Canada's review before returning any of the company's product.

Editor’s note: An earlier version of this story included an incorrect timeline for when certain CannTrust developments occurred. Those errors have now been corrected.

Cannabis Canada is BNN Bloomberg’s in-depth series exploring the stunning formation of the entirely new – and controversial – Canadian recreational marijuana industry. Read more from the special series here and subscribe to our Cannabis Canada newsletter to have the latest marijuana news delivered directly to your inbox every day.