CannTrust continues its fight to remain in the industry following a set of violations that nearly sank the company, according to BNN Bloomberg.
Initially, CannTrust’s situation seemed untenable. But when Bonify – a company known for allowing massive amounts of illegal cannabis into its supply – regained its license, CannTrust’s case actually has a fighting chance.
After months of investigation and internal changes, CannTrust submitted a remediation plan to Health Canada, aiming to meet all compliance requirements in the coming months.
Aiming for First Quarter 2020
CannTrust’s license was suspended in September. But rather than make gradual progress to improve operations, Health Canada discovered additional violations as time went on.
But after months of treading water, CannTrust has regrouped and intends to push forward. BNN Bloomberg explains:
“CannTrust Holdings Inc. has submitted a remediation plan to Health Canada as part of its efforts to regain the regulator’s trust and return to compliance. The embattled cannabis producer says it’s aiming to complete all of the activities detailed within the plan by the end of the first quarter of next year, according to a release late Thursday.”
CannTrust has a lot of work ahead of them in the coming months. With issues like illegal grow rooms, poor labour practices, black market seeds, security flaws and deliberate attempts to withhold information from Health Canada, the company has built up quite a rap sheet since July.
No Specific Details
CannTrust’s specific steps have not been publicly announced. However, they do give a general idea as to what the plan entails.
The company says their plan includes:
“…an expanded internal training program, a strengthened governance and operations framework, infrastructure enhancements, and prescribed accountabilities and timelines for a variety of specified tasks.”
From what we can glean, the plan is highly focused on efficiency, compliance, facility enhancements and training – all of which were lacking prior to CannTrust’s suspension.
Although we are kept guessing about whether CannTrust will succeed, interim CEO Robert Marcovitch is optimistic, saying:
“CannTrust is confident that its remediation plan addresses all the compliance issues identified by Health Canada.”
However, not everyone shares Marcovitch’s optimism. Derek Dlay, an analyst at Canaccord Genuity believes CannTrust is on the right track, but also adds:
“Having said that, there is still significant uncertainty whether CannTrust will eventually achieve full compliance in the near term.”
Realistically, only CannTrust knows how much legwork is ahead of them. Those of us on the outside can only speculate.
Unfortunately – albeit unsurprisingly – CannTrust was forced to scale back its workforce. In September, the company laid off 180 workers. Now, another 140 are joining them in order to save money in the interim.
CannTrust says these layoffs will save them $400,000 per month in labour costs. However, they need to rehire these employees within 35 weeks, or the total severance will be $880,000.
Marcovitch is not happy with the situation, but admits that it is necessary in order to reflect the company’s current sustainability. He explains:
“This was a difficult decision, but it is imperative that our workforce reflects the current requirements of our business. Reducing [CannTrust’s] current operating expenses supports our financial sustainability, and places us in the best position to fully resume production upon the reinstatement of our [licences]. We look forward to rehiring at that time.”
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