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CannTrust Holdings' stock sinks further over regulatory breach

By Karen Graham     Jul 12, 2019 in Business
Vaughan - CannTrust Holdings Inc. shares continued their rout after a ninth analyst downgraded the stock Thursday in response a regulatory breach that has forced the company to halt sales of nearly 30,000 pounds of pot.
CannTrust is under scrutiny by Health Canada after it was found on Monday that the Vaughn, Ontario-based company grew marijuana at its Pelham, Ontario, plant when 5 of its 12 grow rooms had not yet been licensed.
After that news came out on Monday, Market Watch reported that a Danish company, Stenocare A/S said in a statement it had sold some of the illegally grown marijuana to some of their patients.
On Friday morning, CannTrust announced it was halting all cannabis sales and shipments while Health Canada reviews its processing plant in Vaughan, Ontario. Now its shares are tanking, according to Barrons.
The company points out that the move is voluntary. In an email, a CannTrust representative said: “This review is part of a visit that was scheduled by the regulator when CannTrust voluntarily advised Health Canada of issues that may impact compliance at this facility regarding product storage. CannTrust is working closely with the regulator through the review process and expects to provide further detail of the duration of the hold and other developments as they become available.”
About 12,700 kilograms (28,000 pounds) of CannTrust's marijuana inventory has been seized, pending the outcome of the government investigation.
The Canadian Cannabis Act forbids the export of unlicensed cannabis, and anyone who does so is guilty of an indictable offense with penalties ranging from a fine to imprisonment. In an emailed statement, CannTrust said that all of the products with the exception of one sent to Stenocare had been grown in licensed grow rooms.
The Globe and Mail reported Thursday that the company allegedly hid thousands of pot plants behind temporary walls in order to stage photographs of an unlicensed growing room, citing a former employee. Those photographs were sent to regulators, the newspaper said, according to the Financial Post.
CannTrust Holdings shares opened on the NYSE at $2.79. As of 1:00 p.m. July 12, CannTrust shares are at $2,73 after falling nearly 25 percent on Monday.
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