OCS pulls some CannTrust pot amid Health Canada probe, Alberta puts pot on hold

Published Jul 10, 2019 11:26 p.m. ET
Harvested cannabis is shown in Fenwick, Ont. on Tuesday, June 26, 2018. THE CANADIAN PRESS/ Tijana Martin

TORONTO — The Ontario Cannabis Store has removed certain CannTrust Holdings Inc. products from its online store and from distribution to physical outlets until Health Canada completes its investigation involving pot cultivation in unlicensed rooms, while Alberta has placed the weed in question on hold.

Meanwhile, other provinces continue to stock and sell the company’s goods.

"Due to the Health Canada temporary hold on certain CannTrust cannabis products, Ontario Cannabis Store has voluntarily removed all affected products from distribution through and to the authorized retail stores pending the outcome of the investigation," said spokesman Daffyd Roderick in an emailed statement on Wednesday.

He added that customers who ordered the products will be eligible for a refund if returned in original unopened condition within 14 days of delivery, but did not specify which products have been affected.

Heather Holmen, a spokeswoman for the Alberta Liquor Gaming and Cannabis Authority, said its decision affects online product available through and AGLC distribution.

"As a precautionary measure, AGLC is placing the affected lots on hold while Health Canada conducts its investigation," she said.

"It is at the discretion of privately licensed Alberta retailers to work in consultation with CannTrust and Health Canada to determine whether they will continue to sell existing inventory, should they have affected products."

Holmen said Health Canada has not issued a recall and AGLC will monitor the situation and respond once it releases its findings.

Government entities in British Columbia, Nova Scotia, Manitoba and Saskatchewan said Wednesday they have not pulled any of CannTrust products from distribution.

CannTrust disclosed Monday that it was notified by Health Canada that it had found cannabis cultivation in five unlicensed rooms at its facility in Pelham, Ont. between October 2018 and March 2019, before receiving the appropriate licences in April 2019.

Health Canada said Monday it discovered that CannTrust was growing cannabis at its Ontario greenhouse in rooms that had not yet been approved, and that employees provided "false and misleading information" to inspectors. The Ottawa−based agency added that it seized product and obtained samples for further testing.

The licensed producer said Health Canada put 5,200 kilograms of its cannabis on hold, while it voluntarily put an additional 7,500 kilograms on hold at its Vaughan, Ont.−based facility. The company confirmed that some of the product that originated from the unlicensed rooms had been sold.

CannTrust said Wednesday that the OCS continues to stock and sell its products but has recently removed product that has been associated with the unlicensed rooms until the regulator’s probe is complete.

"CannTrust has informed all of our partners about the current state of the Health Canada audit and has assisted in identifying products associated with the previously unlicensed rooms," a spokeswoman said in a statement. "Since all products have met Health Canada quality requirements, no additional provinces have indicated their intention to remove inventory at this time."

CannTrust’s Danish partner said Tuesday that one batch of products received from the licensed producer was linked to the unlicensed rooms. Stenocare added that the "very small" batch had been quarantined for potential destruction pending Health Canada’s investigation and it has been in touch with the Danish Medicines Agency about the matter.

Health Canada said CannTrust has until July 18 to respond to the regulator’s report, which found the company was not in compliance with certain regulations. The regulator said it will then review the information provided and determine the appropriate compliance and enforcement action, which could include the suspension or cancellation of a federal licences or administrative monetary penalties of up to $1 million.

CannTrust said Monday that results from the regulator’s tests of its product samples were expected within 10 to 12 business days. Chief executive Peter Aceto said the nearly 13,000 kilograms of held−back product represented the "majority" of its inventory, and warned of product shortages ahead.

Aceto said earlier this week that "mistakes" were made and it is a "high priority" for the company to correct them. He added that CannTrust is conducting a thorough review to determine what transpired, and has been in touch with its 72,000 patients and the provinces.

Viviana Zanocco, a spokeswoman for the B.C. Liquor Distribution Branch which is also responsible for cannabis, said CannTrust has assured that all product it received has passed quality control testing at Health Canada certified labs and the licensed producer’s own processes.

"Until such time as Health Canada issues a recall, or we receive further direction from the supplier, we will continue to supply CannTrust’s product to retail stores and to customers directly via our online BC Cannabis Store," she said in an emailed statement.

The Nova Scotia Liquor Corporation, which controls sales of recreational cannabis in the province, said the CannTrust product it has on hand "has been tested and approved by Health Canada and is safe for our customers."

"We continue to be in dialogue with CannTrust today for clarity around the product we will receive," said spokeswoman Beverley Ware in an emailed statement.

In Saskatchewan, cannabis retailers order pot products directly from licensed producers such as CannTrust or licensed wholesalers.

David Morris, a spokesman for the Saskatchewan Liquor and Gaming Authority, said it has not issued any notices to provincial retailers regarding CannTrust products.

Manitoba Liquor & Lotteries said it has not received a notice that any affected product entered the province.

"CannTrust products continue to be available for orders by Manitoba’s private cannabis retailers," said spokesman Lorne Kletke in an emailed statement.

Shares of CannTrust closed down by nearly 13 per cent Wednesday on the Toronto Stock Exchange to $4.12, after falling more than 20 per cent on Monday.

Companies in this story: (TSX:TRST)

Armina Ligaya, The Canadian Press


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