Shares in Canadian cannabis company CannTrust lost about a quarter of their value on the stock market on Monday after the company said Health Canada has deemed a second one of its facilities “non-compliant with certain regulations.”
The Vaughan, Ont.-based company’s problems began about a month ago after government health authorities discovered it had been producing cannabis plants in unlicensed greenhouses.
Health Canada halted the sale of products from the company’s facility in Pelham, Ont., near Niagara Falls, last month after it was revealed that the company was growing cannabis in five greenhouses within the 12-greenhouse facility that didn’t have a licence to operate at the time.
Now a second facility, in Vaughan, north of Toronto, has also been found in violation of regulations.
A news release from the company said Health Canada flagged the company for, among other things, inadequate security protocols, failing to retain documents, inadequate quality assurance and improper cannabis storage procedures.
Those revelations came about following an inspection by officials from Health Canada of the Vaughan facility in early July.
CannTrust has already fired its CEO and board chair as a result of the first illegal growing scandal.
“We have retained independent consultants who have already started addressing some of the deficiencies noted in Health Canada’s report,” CannTrust interim CEO Robert Marcovitch said in a statement.
“We are looking at the root causes of these issues and will take whatever remedial steps are necessary to bring the company into full regulatory compliance as quickly as possible.”
Before recent events, CannTrust shares were worth about $13 apiece on the Toronto Stock Exchange. But they lost 24 per cent of their value in premarket trading on Monday, going as low as $2.45 a share before recovering to just over $3 a share in the afternoon.
That’s the investor reaction to the possible worst case scenario of the probe’s outcome: Health Canada revoking the company’s licence to cultivate, effectively putting the company out of business or forcing them to be taken over at their current deeply discounted level.
In additional to recreational sales, the company has almost 70,000 medical marijuana customers. Exactly what has happened to the drug supply of those patients while virtually the company’s entire product inventory is on the shelf is unclear. CannTrust has yet to respond to a request for information from CBC News as to the status of their medical marijuana customers.