CannTrust to Destroy Millions in Cannabis Products as it Struggles to Regain Compliance
Medical and recreational marijuana producer CannTrust is about to lose $77 million worth of inventory as it fights to stay afloat, according to Markets Insider.
A classic example of what happens when you attempt to dupe Health Canada, CannTrust needs little introduction. The ironically-named company made headlines in September when its license was suspended after a lengthy investigation.
Health officials uncovered massive company negligence, incompetence, corruption and overall misconduct. This led to a huge corporate shake-up, starting in July with the resignation or dismissal of key upper management members, most notably ousting the company’s CEO, Peter Aceto.
But a lot has happened since July, when the first infractions began to unveil. After months in damage control mode, the company is making huge steps – and sacrifices – to one day again be open for business.
CannTrust’s board of directors is working to make its way into Health Canada’s good graces, but the goal requires some very difficult steps. The most glaring, of course, being the massive inventory loss:
“The cannabis producer CannTrust Holdings said it planned to destroy $65 million worth of weed inventory and roughly $12 million worth of ‘biological assets’ like plants in an attempt to gain regulatory approval in Canada.”
But this is just the beginning. According to an October 14th press release CannTrust has several key steps planned. This “remediation plan” is to demonstrate CannTrust’s intention to be cooperative and transparent with Health Canada, while working to become compliant:
“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 license;
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 press release also notes that, while the value of the inventory is significant, it is unsellable – returned by various patients, distributors and retail stores.
However, this is just the beginning. CannTrust is set to provide a more detailed plan by October 21st.
Perhaps the simplest way to describe CannTrust’s purge is the desire to create a clean slate. CannTrust says that, once the non-compliant products are destroyed, it will leave room for cannabis that has been grown, processed, packaged, stored and monitored as per Health Canada’s regulations.
The news of CannTrust’s commitment garnered some positive attention from the stock market. Following the announcement, CannTrust’s stock value increased by 25%.
Granted, the value plunged by nearly 78% during the course of their ordeal, worth $1.06 per share as of October 14th.
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