VAUGHAN, Ont. -- CannTrust Holdings Inc. shares shot higher Tuesday after the pot producer announced it will destroy $77 million worth of cannabis plants and inventory as part of its efforts to comply with Health Canada regulations.
The stock closed up 51.7 per cent, or 62 cents to $1.82 in trading on the Toronto Stock Exchange.
The Vaughan, Ont.-based company received a notice of licence suspension in September from the federal regulator indicating its authority to produce cannabis, other than cultivating and harvesting, and to sell pot had been suspended.
The board of directors determined it necessary to destroy $12 million worth of biological assets and about $65 million worth of inventory that was not authorized by CannTrust's licence, the company said.
CannTrust said it will not challenge Health Canada's partial suspensions and remains focused on working with the regulator.
The destruction process will free up "much needed capacity" to implement remediation measures and store material that has been grown and processed in accordance with the company's license since April 5, the company said.
CannTrust said it will implement measures identified by the regulator including ensuring cannabis is produced and distributed only as authorized, and improving record keeping as well as inventory tracking.
"CannTrust is confident that its detailed remediation plan will not only address all of the compliance issues identified by Health Canada, but it will also build a best-in-class compliance environment for the future," interim chief executive Robert Marcovitch said in a statement.
The company said it will provide a detailed remediation plan to Health Canada by Oct. 21.
This report by The Canadian Press was first published Oct. 15, 2019.