CannTrust stock is the biggest pot stock loser on Monday on the news that CannTrust Holdings' (TSX:TRST) (NYSE:CTST) Vaughan, Ontario facility is non-compliant with certain regulations.
While it is true that the marijuana sector has gone through a bit of a slump due to a range of factors, Canadian cannabis company CannTrust Holdings has been struggling due to things of its own doing. Last month, the company was found in violation of Health Canada regulations after it emerged that it had cultivated cannabis in unlicensed rooms in its Pelham facility.
CannTrust stock has been beaten down ever since, and today, there was even more bad news for the company after it announced that its other facility in Vaughan had also been found in breach of regulations.
According to a statement released by CannTrust today, Canada’s cannabis industry regulator Health Canada has informed the company that its facility in Vaughan has been found to have broken more than one rule. After the news broke, CannTrust stock nosedived by as much as 31% at $2.18 in early morning trade and gave up the 40% gains it had generated in late trading on Friday.
The Health Canada report pointed out that the company had not sought approval about turning five rooms into storage facilities and in addition to that, the facility’s security controls did not meet regulatory thresholds. On top of that, the quality control systems have also been found to have been insufficient.
However, that’s not all. The regulator pointed out three other issues that did not meet regulatory guidelines, and it goes without saying that the problems for the company have been compounded dramatically. After the issues with its first plant, the company Chief Executive Officer and the President had to step down as CannTrust fell into complete chaos. So what will happen this time around?
The new CEO Robert Marcovitch stated that CannTrust Holdings has employed the services of independent consultants in order to take care of the issues that have been highlighted in the Health Canada report. He added that the company is going to leave no stone unturned in its efforts to comply with all regulatory requirements.
CannTrust stock is the biggest stock loser in the marijuana sector, with a slump of 80% from its peak price of $11.
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