Associated Press
- CannTrust Holdings' greenhouse was found non-compliant by Health Canada, the company said in a statement Monday. It has put more than 12,700 kg of product on hold as a result.
- Some customers and patients will experience temporary product shortages, the company said.
- Shares dropped as much as 22% on the news, the most on record.
- Watch CannTrust trade live.
Shares of CannTrust Holdings - a Canadian cannabis company - dropped as much as 22% on Monday after Health Canada found it non-compliant for growing pot in greenhouse rooms that were not licensed to operate.
That marked the stock's biggest intraday decline on record.
CannTrust grows most of its product in a greenhouse in Pelham, Ontario. The facility was recently licensed in April, but regulators found that CannTrust grew marijuana in five rooms that were not licensed between October and March. Health Canada also found that employees of CannTrust had given the regulator inaccurate information.
As a result, Health Canada has put a hold on the cannabis that was cultivated in the rooms in question, which amounts to about 5,200 kilograms - or 11,464 pounds - of dried product. The company also placed a voluntary hold on another 7,500 kilograms of product that was produced in the same rooms. Health Canada is in the process of conducting quality checks on the products on hold.
Some customers and patients will experience temporary product shortages, which the company is exploring options to mitigate, the company said in a press release.
"We have made many changes to make this right with Health Canada," Peter Aceto, CEO of CannTrust, said in a statement. "We made errors in judgement, but the lessons we have learned here will serve us well moving forward."
The company has also retained external advisors to review its compliance processes, in addition to boosting employee training and reviewed and updated its processes and procedures. It said in a press release that all product sold from the impacted rooms passed quality control testing at Health Canada certified labs as well as the company's own quality control.
A shareholder rights law firm, Johnson Fistel, is also investigating potential claims against the company related to the rating by Health Canada, according to a press release from the law firm.
Shares of CannTrust had risen 2% year-to-date through the end of last week.
