CannTrust says certain licences suspended by Health Canada over 'non-compliance'

Mature cannabis plants are photographed at the CannTrust Niagara Greenhouse Facility during the grand opening event in Fenwick, Ont., on Tuesday, June 26, 2018. CannTrust Holdings Inc. is reducing its workforce. THE CANADIAN PRESS/ Tijana Martin

CannTrust Holdings Inc.'s licenses to produce and sell cannabis have been suspended by Health Canada, the pot company disclosed on Tuesday, in the latest setback for the firm which has been under investigation by regulators for cultivation in unlicensed rooms.

The Vaughan, Ont.-based company said it received a notice of licence suspension from the federal regulator indicating its authority to produce cannabis, other than cultivating and harvesting, and to sell cannabis have been suspended.

It adds that the notice cites CannTrust's "previous non-compliance with certain requirements of the Cannabis Act."

CannTrust said it is facing a partial suspension of its licences for standard cultivation and a full suspension of its licences for standard processing, medical sales, cannabis drugs and research.

"While the suspension remains in effect, CannTrust will be permitted to cultivate and harvest existing lots or batches previously propagated, as well as conducting ancillary activities to those lots, including drying, trimming and milling," the company said in a release on Tuesday. "During the suspension, CannTrust may not propagate new lots or batches of cannabis or engage in the sale or distribution of cannabis."

Back in July, CannTrust disclosed the federal regulator's findings that the company was growing pot in several rooms at its greenhouse in Pelham, Ont., prior to receiving the appropriate licences from the government.

Health Canada has not issued a recall on CannTrust's products but placed a hold on roughly 5,200 kilograms of dried cannabis and CannTrust put a voluntary hold on roughly 7,500 kilograms of cannabis products.

CannTrust later voluntarily halted all sales and shipments of cannabis as Health Canada continued its probe into the matter.

In late July, the company terminated its chief executive Peter Aceto "with cause" and asked its chairman Eric Paul to resign after the board discovered new information during an internal investigation into the alleged unlicensed pot growing. It also in July hired a financial adviser to help explore a potential sale and other strategic alternatives for the company.

Last month, CannTrust said its Vaughan, Ont.-based facility was also found to not be in compliance by regulators. Also in August, the company disclosed that the Ontario Securities Commission had opened an investigation into the issues around the alleged unlicensed growing at its Pelham greenhouse.

Earlier this month, CannTrust announced it was laying off about 180 people or roughly 20 per cent of the company's workforce to "reflect the current requirements of our business."

CannTrust said on Tuesday that the company's management and board of directors are reviewing the notice from regulators with its counsel and other advisers.

"Over the past two months, the Company has moved swiftly to assess and address Health Canada's concerns, including areas of operational non-compliance," it said in the release. "The Company remains committed to being in full regulatory compliance."