2nd illegal cultivation site for CannTrust

CannTrust is once again reeling from the investigation launched by Health Canada. For one thing, the regulatory agency found that another of the company’s facilities, located in Vaughan, Ontario, did not meet standards. It found that two areas had been constructed without prior authorization and that safety and quality assurance procedures at the facility were inadequate, while operating procedures did not meet requirements. CannTrust was therefore required to implement a voluntary storage system for approximately 7,500 kg of dried cannabis at its Vaughan manufacturing facility, which had been produced in unlicensed rooms, as was the case in Pelham.

Meanwhile, CannTrust’s independent auditor, KPMG, is withdrawing its audits of the company’s financial statements. The audit firm says that CannTrust’s financial statements for 2018 and the first quarter of this year are unreliable. CannTrust, which is currently under investigation by the Ontario Securities Commission, has also postponed the release of its second-quarter and six-month results and indicated that it may need to restate some of its historical financial statements.

Last month, Health Canada had already placed approximately 5,200 kg of dried cannabis harvested in The five unlicensed venues in Pelham. This had led to the Peter Aceto's dismissal, who had previously served as CEO of CannTrust, as well as a member of the board of directors. The company had been deeply shaken by the revelations, as it had hired a financial advisor to help it explore its options for the future, including a potential sale.

According to Health Canada, this situation could result in the suspension or permanent revocation of CannTrust’s cannabis licenses, as well as fines of up to $1 million. Illegal cannabis cultivation is also a criminal offense, for which individuals can face up to 14 years in prison. In addition, the company’s value has declined, as the Canadian producer’s stock price fell by approximately 55% in one month following the suspension of sales, the dismissal of the CEO, the disclosure of a regulatory investigation, and the need to restate its financial results. On Monday, the stock was down 21.4%.