Ontario Cannabis Store sends cannabis back
CannTrust product estimated at $2.9 million to be returned
Embattled cannabis producer CannTrust will see approximately $2.9 million worth of its product returned by the Ontario Cannabis Store (OCS).
In a release, the Vaughn-based company said it received notice from the Crown corporation that certain CannTrust products sold to OCS are nonconforming.
“The products listed in the
OCS return notice constitute all or substantially all of the company’s products currently held at the OCS and are valued at approximately $2.9 million in the aggregate,” said the company.
More than 350 people are employed at its 430,000-square-foot facility in Pelham, which opened last year.
CannTrust’s release added the OCS operates independently of Health Canada.
“Health Canada has not ordered a recall in respect of any of the company’s products.”
Last month, CannTrust Holdings Inc. fired its CEO Peter Aceto and asked its chair to resign after the board discovered new information during an internal investigation into alleged unlicensed pot growing by the cannabis producer.
Health Canada discovered during an unannounced inspection in June that the pot firm was growing cannabis in several rooms before securing appropriate licences.
The release did not say what nonconforming products meant and did not provide a list of those being returned under a master cannabis supply agreement between itself and the OCS.
“Under the terms of the master agreement, any product that does not comply with applicable law is considered to be a nonconforming product and the OCS may elect to exercise its right, among others, to return such product to the company at the company’s expense.”
CannTrust also recently announced that its application for a management cease trade order was approved by the Ontario Securities Commission.
It said the order does not affect the ability of investors who are not insiders to trade in the securities of the company.
The order prohibits directors
and executive officers of the company from trading in CannTrust securities until two full business days after all filings it’s required to make under Ontario securities laws are made, including the filing of second-quarter financials.
CannTrust also said it was been working with the New York Stock Exchange (NYSE) to keep it apprised of the company’s interactions with Health Canada and related matters.
The company said it estimates the value of the inventory and biological assets impacted by the pending Health Canada decisions is approximately $51 million as of June 30.
“Management of the company further estimates the impacted inventory represents approximately 53 per cent of the company's total inventory as of June 30 and the impacted biological assets represent approximately 30 per cent of the company’s total biological assets as at June 30.”
CannTrust said it had approximately $250 million in cash and cash equivalents at the end of June.
Trading of the company's securities on the TSX (Toronto Stock Exchange) and NYSE continues.