CannTrust Falls as Health Canada Issues Non-Compliance Report
Shares of CannTrust Holdings Inc. CTST fell more than 6% after the company announced that its greenhouse facility in Pelham, Ontario was found non-compliant under certain regulations by Health Canada. The facility was declared so for producing cannabis in five unlicensed rooms for a period of six months (October 2018 to March 2019).
Its applications were under review by the regulatory body. Licenses for each of these five rooms were issued in April this year. There were 12 rooms at the Pelham facility. Moreover, the company’s employees provided inaccurate information to the regulator.
The company has accepted the non-compliance findings by the regulatory agency and even ensured to take proper action for maintaining the current and future compliance.
So far this year, shares of CannTrust have lost 25.4% against the industry’s increase of 8.6%.
Following the inspection, Health Canada placed a hold on approximately 5,200 kg of dried cannabis that was harvested in the unlicensed rooms in Pelham. Moreover, CannTrust voluntarily held around 7,500kg of dried cannabis grown at its Vaughan manufacturing plant, which was also produced in unlicensed rooms.
The news comes as a major setback for investors as CannTrust can no longer supply the seized cannabis until it is deemed safe by the regulators. Consequently, patients might experience a temporary shortage of products due to the restraint placed by the regulatory body. An update from Health Canada on the quality of product samples impounded at Pelham, is expected in the next 10 to 12 business days.
Notably, operations at both the Pelham and Vaughan sites are fully licensed at this point of time and the company continues to grow and sell cannabis reaped from the licensed rooms at these hubs. CannTrust is not sure whether the current situation will affect its finance standing.
We remind investors that the marijuana industry has strong potential especially after its legalization for recreational and medicinal use. Moreover, the industry is enjoying benefits of expansion into other spaces like food, beverage, tobacco and cosmetics.
Apart from CannTrust, companies, namely GW Pharmaceuticals plc GWPH, Cronos Group Inc. CRON and Canopy Growth Corp. CGC are all discovering, developing and manufacturing drugs from cannabis for various recreational and medicinal purpose.
CannTrust currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +98%, +119% and +164% in as little as 1 month. The stocks in this report could perform even better.
See these 7 breakthrough stocks now>>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
GW Pharmaceuticals PLC (GWPH) : Free Stock Analysis Report
Canopy Growth Corporation (CGC) : Free Stock Analysis Report
Cronos Group Inc. (CRON) : Free Stock Analysis Report
CannTrust Holdings Inc. (CTST) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research