Canntrust lays off 140 staff as special probe wraps up

TORONTO Canntrust Holdings Inc. is laying off 140 employees, or about 25 per cent of its remaining workforce, as it attempts to recoup losses from the fallout of the unlicensed growing scandal that resulted in the suspension of the company’s Health Canada licence to cultivate and sell cannabis.

The company’s stock ended the day down almost seven per cent on news of the layoffs.

In a statement issued Thursday evening, Canntrust said the layoffs — which will occur in phases between late October and the end of 2019 — are expected to save the firm about $400,000 monthly.

The Vaughan, Ont.-based company had previously laid off roughly 180 employees in August, including the master grower who was in charge of cultivation at Canntrust’s Niagara facility, which was the subject of a Health Canada investigation for growing in unlicensed spaces.

“This was a difficult decision, but it is imperative that our workforce reflects the current requirements of our business,” said Canntrust chief executive Robert Marcovitch. “Reducing the Company’s current operating expenses supports our financial sustainability, and places us in the best position to fully resume production upon the reinstatement of our licenses.”

Canntrust also announced that it had concluded a special committee investigation into the unlicensed growing, and had submitted a “remediation plan” to Health Canada on Oct. 21 that specifies how the company plans to regain compliance. Details of the plan, according to the company, include a comprehensive internal training program and a strengthened governance and operations framework.

“We will also take steps to recover all cannabis from distributors and retailers that has not already been sold to end consumers or returned to Canntrust,” the company said. In mid- October, Canntrust destroyed all its remaining inventory that was grown in unlicensed spaces, that amounted to roughly $77 million worth of cannabis.

The company also noted that the special committee found no evidence that any of Canntrust’s remaining board members “were aware of or engaged in any non-compliance issues.”

Marcovitch said “Canntrust has taken swift action to begin addressing the factors that led to its non-compliance.”

PETER J. THOMPSON/FILES Canntrust says it plans to regain compliance with Health Canada through steps such as a strengthened operations framework. Its licence was suspended due to illegal growing.