On Monday, CannTrust said that Health Canada had given its Vaughan, Ontario factility a non-compliant rating.
Shares plummeted more than 25% in early trading on the news.
Its the second recent instance where CannTrust was found by Health Canada to be operating in non-compliant facilities.
CannTrust’s stock had already lost more than 80% since reporting weak earnings in late March.
It more recently dropped 50% in a matter of weeks following the initial finding that it was growing marijuana in unlicensed rooms.
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CannTrust continued to slide on Monday after Health Canada deals the company yet another blow.
Shares of CannTrust tumbed more than 28% in early trading Monday after Health Canada rated its Vaughan, Ontario facility non-compliant, the company said.
The company said in a statement Monday that Health Canada’s rating was based on observations made during an inspection that took place between July 10 and July 16. The inspection found that five rooms converted from operational areas were being used for storage without approval, and that two new areas were constructed for storage that were also not approved.
In addition, Health Canada reported “insufficient security controls at the manufacturing facility,” and “inadequate quality assurance investigations and controls.” CannTrust also did not provide Health Canada with the necessary information to conduct its audit in a timely manner.
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This latest development is just the latest in a string of bad news for CannTrust. The cannabis company’s woes this year started with its earnings report in late March, which missed analysts’ most conservative profit forecast, prompting sharp selling that’s since extended to a more than 80% loss.
In July, Health Canada found that it grew pot in unlicensed rooms at another facility operated by the cannabis company. That prompted sharp selling in CannTrust’s stock that saw plummet 50% in a matter of weeks. The company ousted its CEO after the incident.
On Friday, shares slid on news that KPMG, an auditor, had withdrawn results for the most recent quarterly and full-year earnings after saying the documents shouldn’t be relied upon.
“We are continuing to work hard to regain the trust of Health Canada, our patients, shareholders and partners,” CannTrust interim CEO Robert Marcovitch said in a company statement. “We have retained independent consultants who have already started addressing some of the deficiencies noted in Health Canada’s report.”
CannTrust said that while it is working on a remediation plan with its independent Special Committee of the board of directors, Health Canada has advised that it is “currently unable to provide any guidance about the timing or content of its decisions” about the company.
Shares of the company were down 34% year-to-date through Friday.
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Source:: Business Insider – Finance