CAN (ON): Health Canada suspends CannTrust license

CannTrust Holdings received late this morning a Notice of Licence Suspension under section 64(1) of the Cannabis Act (Canada). The Notice cites the Company’s previous non-compliance with certain requirements of the Cannabis Act (Canada) and the regulation made thereunder in respect of the matters that the Company has been discussing with Health Canada.

The Notice states that Health Canada has suspended CannTrust’s authority to produce cannabis, other than cultivating and harvesting, and to sell cannabis. As such, the Notice constitutes a partial suspension of the Company’s licence for standard cultivation and a full suspension of its licences for standard processing, medical sales, cannabis drugs and research issued under the Cannabis regulations. 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. During the suspension, CannTrust may not propagate new lots or batches of cannabis or engage in the sale or distribution of cannabis.

The Notice states that Health Canada will reinstate CannTrust’s licences under section 64(4) of the Cannabis Act if the reasons for the suspension no longer exist or if CannTrust demonstrates that the suspension was unfounded. The Notice also states that Health Canada considers that implementation of the following measures could potentially address the public health and safety risks that contributed to Health Canada’s decision to issue the Notice:

  • Measures to ensure that cannabis will be produced and distributed only as authorized, including measures to control the movement of cannabis in and out of CannTrust’s site;
  • Measures to recover cannabis that was not authorized by CannTrust’s licence;
  • Measures to improve key personnel’s knowledge of, and compliance with the provisions of the Act and the Regulations that apply to CannTrust; and,
  • Measures for improving the manner in which records are kept, including a plan to improve the inventory tracking, and any interim measures to ensure that information provided to Health Canada can be reconciled.

The Company’s management and Board of Directors are reviewing the Notice with the Company’s counsel and other advisors.

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

On another note, a former CannTrust Holdings Inc. employee who previously spoke out on alleged transgressions at the company had mixed feelings when he learned Tuesday that its licence to produce and sell recreational and medical cannabis in Canada was suspended by federal regulators.

“I was hoping Health Canada would investigate those directly involved with the wrongdoing and that they would be reprimanded,” Nick Lalonde told BNN Bloomberg in a phone interview. “But there are innocent people at CannTrust who weren’t involved and are likely to lose their jobs. It’s just not fair to them.”

Lalonde, who described himself in the phone interview as the “whistleblower in the CannTrust case,” worked at CannTrust from July 2017 to May of this year. He made headlines in July when he alleged staff at CannTrust’s Pelham, Ont. facility had been asked to install temporary walls in an attempt to hide unlicensed pot production from Health Canada officials.

“They were following regulations for about a month,” Lalonde told BNN Bloomberg in a phone interview in July. “And then all of a sudden, they stopped following regulations and started cutting corners and breaking rules.” Lalonde had claimed 15 to 30 people were working in the rooms each day, prior to them being properly licensed.

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