Health Canada Finds Canntrust Holdings Vaughan, Ontario Facility Non-Compliant

Canntrust Holdings (TSX: TRST) (NYSE: CTST) provided a management update this morning related to its current facilities. Within, it identified that Health Canada had forwarded their findings to the company related to an inspection that took place in June at their Vaughan, Ontario facility.

Within, it was identified that more of the same was essentially occurring. The licensed producer who has been in the media spotlight for the last month was found to be growing cannabis in unlicensed grow rooms at its Pelham, Ontario facility as far back as November. The latest news release identifies that similar regulatory oversights were taking place at the Vaughan, Ontario facility. Infractions found by Health Canada include:

  • The conversion of five rooms from operational areas to storage areas, which were used for storage since June 2018 without prior approval of Health Canada;
  • The construction of two new areas without prior approval of Health Canada, one of which was used to store cannabis since November 2018;
  • Insufficient security controls at the manufacturing facility;
  • Inadequate quality assurance investigations and controls;
  • Standard operating procedures that did not to meet the requirements under regulations; and
  • Documents or information that were not retained in a manner to enable Health Canada to complete its audit in a timely manner.

The latest update demonstrates that the firm continued to willfully ignore regulations put into place by Health Canada. Although when news initially broke on the Pelham facility’s unlicensed operations, the firm was quick to point out that the identified area had since been licensed and all should be now from a compliance perspective.

Infractions that began in June 2018 suggest that Canntrust had grown a disdain for the regulatory body, who is known to be slow when it comes to providing approvals for licensed producers. Continuous skirting of the law in such a manner will likely be factored in to Health Canada’s ultimate ruling on the regulatory status of the Pelham, Ontario facility.

The news comes on the back of Friday’s announcement wherein the firm identified that auditor KPMG LLC has since pulled its backing on the companies latest audited filings as a result of being unable to rely on data provided by Canntrust Holdings management.

Canntrust is currently trading at $2.29 on the New York Stock Exchange, down 27.76%.

Information for this briefing was found via Sedar and CannTrust Holdings. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.