Ontario Cannabis Store returns all product to CannTrust
OCS says return of $2.9M of supply that doesn’t conform to deal won’t lead to shortages
The Ontario government’s cannabis wholesaler and online retailer is returning all products from CannTrust Holdings Inc. — valued at roughly $2.9 million — because they do not conform with the terms of its supply deal with the beleaguered cannabis company.
CannTrust said Monday the Ontario Cannabis Store has determined that some of the products it sold to the crown corporation were “non-conforming” under the terms of its master cannabis supply agreement.
“Any product that does not comply with applicable law is considered to be non-conforming 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 said in a statement.
In an emailed statement, an OCS spokesperson confirmed the move.
“This decision was made by the OCS in accordance with the terms of its agreement with CannTrust, consistent with the OCS’s obligation to operate its business in a responsible manner,” said Daffyd Roderick, director of communications at OCS.
Roderick added that returning the CannTrust product wouldn’t lead to shortages on OCS shelves.
“We’re confident we will be able to meet the demands of the market through our current supply agreements,” said Roderick, who wouldn’t say
exactly how much of OCS’s overall supply the CannTrust product represented.
In May, the most recent numbers for which official numbers are available, Canadians bought roughly 9,500 kilos of dried cannabis, and 9,700 litres of cannabis oil, according to government of Canada statistics.
CannTrust noted that the Ontario retailer operates independently of Health Canada, which has not ordered a recall on any of the company’s products.
The move by the province’s crown corporation in charge of wholesale distribution and online pot retail is the latest setback for the cannabis producer, which continues to be under investigation by Health Canada.
Last month, CannTrust disclosed the federal regulator’s findings that the company was growing cannabis in various rooms of its greenhouse in Pelham, Ont., before receiving the appropriate government approvals.
Health Canada placed a hold on CannTrust’s inventory amounting to approximately 5,200 kg of dried cannabis and the company instituted a voluntary hold of approximately 7,500 kg of dried cannabis equivalent. CannTrust later voluntarily suspended all sales and distribution of its products as a precaution while regulators investigate its Vaughan, Ont.based manufacturing facility.
Last week, the company said Health Canada notified CannTrust that its Vaughan facility was rated as non-compliant as well. CannTrust also said earlier this month that the Ontario Securities Commission has opened an investigation into issues around the alleged unlicensed growing at its Pelham, Ont. greenhouse.
Meanwhile, Health Canada continues its probe, the outcomes of which could include suspension or termination of CannTrust’s cannabis licences, hefty fines and possible destruction of the held-back cannabis products.
While Ontario has decided to return CannTrust’s products to the company, other provinces are awaiting the results of Health Canada’s review before taking any further action.
The B.C. Liquor Distribution Branch’s position on CannTrust is unchanged, said Viviana Zanocco, its manager of corporate communications and stakeholder relations.
“Until such time as Health Canada issues a recall or other direction, we will continue to supply CannTrust’s product to private and public retail stores,” she said in an emailed statement. “We remain in regular communication with Health Canada on this matter.”
A spokesperson for Cannabis NB said their supply agreement with CannTrust remains unchanged as they wait for review results from the federal regulator.