National Post (National Edition)
CANNTRUST VIDEO SHOWS ILLEGAL POT ROOM.
CEO shown in front of room full of plants ‘way before room became legal’
The chief executive of CannTrust Holdings Inc. appeared in a promotional video filmed directly outside an unlicensed cannabis grow room at the company’s Pelham, Ont., facility in early 2019, according to a former employee who was present when the video was shot.
The video, which was published by CannTrust’s YouTube account on Feb. 27, 2019, shows company CEO Peter Aceto chatting with a plant production manager outside a room full of cannabis plants. The plants can be clearly seen through what appears to be a plastic wall with metal hinges — on one occasion, the production manager gestures towards the plants in the grow room to emphasize a point.
Five former employees who spoke to the Post identified the room in the video as RG8 or Range 8, noting that its plastic walls were a distinguishing feature. Three of those employees worked in the room as grow technicians between October 2018 and April 2019, the six-month period during which CannTrust has acknowledged it was cultivating unlicensed cannabis. Two of the employees saw the video being filmed in early 2019.
“I knew RG8 was not licensed because they used to announce if a room came online,” said one of the former employees, whose role was supervising grow technicians in the facility. “The thing that blew my mind was when Aceto was standing right in front of RG8 filming that video, doing an interview. That was way before the room became legal.”
RG8 is the same room in which Nick Lalonde, another one of the five former employees, said he was asked to hang poly walls by his immediate manager, to cover up “thousands of cannabis plants” before a Health Canada inspection. Several days after Lalonde informed Health Canada of the poly wall incident, the department conducted a surprise inspection of the Pelham facility.
“I did not know the room was unlicensed before I hung the poly walls, but then I started to suspect it and investigated further,” Lalonde told the Post. He added that he was “surprised” Aceto was filming a video in front of RG8 at the time the video was shot.
The room was also referenced in a Globe and Mail report on Tuesday that quoted a November 2018 email by CannTrust’s director of quality and compliance, Graham Lee, telling several top company executives including Aceto that they had “dodged some bullets” with regards to a Health Canada inspection.
“[Health Canada] did not ask about RG8E/W, which are unlicensed rooms currently full of plants,” Lee’s email said, according to the report.
Another former employee who worked in Range 8 also said that parts of the video were filmed there.
“I can say 100 per cent that that video was shot outside of Range 8. They pan to behind Peter in the video and you can see our supervisors’ table. Range 8 had the only plastic wall that you could see full grown plants from inside the facility,”
All the former employees the Post spoke to, with the exception of Lalonde, declined to be named for fear of legal repercussions from CannTrust and for being labelled as “snitches” by their present employers. All are still employed in the cannabis industry.
In a July 8 statement, the company said that Health Canada had given it a non-compliant rating for growing cannabis in five unlicensed rooms in the Pelham facility.
Those five rooms, which were not identified in the statement, only received Health Canada licensing in April 2019, two months after the video was published on YouTube.
In an interview with the Post on the day CannTrust announced it was being investigated by Health Canada, Aceto was directly asked if he knew that cannabis was being grown in unlicensed parts of the Pelham facility. “It is a question I have thought about a lot,” he said at the time. ”Getting to understand what happened here is a priority.”
When asked about the video, CannTrust responded with a statement attributed to Robert Marcovitch, a member of the company’s special committee which was appointed by the board earlier this week to investigate the unlicensed growing at Pelham.
“The Independent Special Committee of the Board of Directors of CannTrust is
THE ONLY PLASTIC WALL THAT YOU COULD SEE FULL GROWN PLANTS.
in the final stages of a thorough investigation of these matters as part of our due diligence requirements. We expect to conclude this investigation within days and will take all appropriate actions immediately thereafter,” Marcovitch said.
One former employee who joined the company just after Aceto was appointed CEO in October said his main task was to move plants into RG8, which was empty when he first joined the company. “For a month and a half, my job was moving tables into RG8. They wanted to get all the plants in before the New Year so every day we would handshuffle tables into that room, and then move plants in,” he told the Post.
This employee claims he did not know the status of the room, and was just following orders given to him by his immediate manager. “One day, I think it was late January, I was working in RG8, pruning leaves, and they told everyone to keep it down because there was a video being filmed outside the room. They shut off all the fans to reduce the noise, and I saw Peter Aceto talking to a camera just outside the room,” said the employee.
The Vaughan, Ont.-based company has seen its share price erode by more than 50 per cent since it acknowledged growing cannabis without Health Canada approval. The department seized 5,200 kilograms of product in early July, and CannTrust put another 7,500 kilograms on hold shortly after. The company also halted all sales of its product on July 11, pending Health Canada’s investigation.
There are questions as to whether CannTrust, which was once the sixth-most valuable cannabis company in Canada by market value, could lose its cultivation licence altogether. In the course of the last two weeks, multiple bank analysts have either significantly downgraded their ratings on the company or suspended coverage altogether.