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Canntrust Holdings Inc
Symbol TRST
Shares Issued 141,481,527
Close 2019-10-11 C$ 1.20
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Canntrust to destory $12M in assets, $65M in inventory

2019-10-15 07:34 ET - News Release

Mr. Robert Marcovitch reports

CANNTRUST ADVANCES ITS PLAN TOWARDS REGULATORY COMPLIANCE

Canntrust Holdings Inc. continues to make significant progress on its commitment to take any and all actions required to both bring the company into full regulatory compliance and seek the full reinstatement of its licences.

On Sept. 17, 2019, CannTrust announced that Health Canada had suspended the company's licences to produce cannabis and sell cannabis, without affecting the company's ability to continue cultivating and harvesting cannabis. The company will not challenge Health Canada's partial suspensions and remains focused on working collaboratively and transparently with the regulator to address the company's non-compliance matters. In pursuit of this goal, the company has provided Health Canada with an outline of its proposed remediation strategy. This strategy is aimed at implementing the measures identified by Health Canada as necessary to attempt to address the regulator's concerns, namely:

  • Measures to ensure that cannabis will be produced and distributed only as authorized, including measures to control the movement of cannabis in and out of Canntrust's site;
  • Measures to recover cannabis that was not authorized by Canntrust's licence;
  • Measures to improve key personnel's knowledge of, and compliance with, the provisions of the act and the regulations that apply to Canntrust;,
  • Measures for improving the manner in which records are kept, including a plan to improve the inventory tracking, and any interim measures to ensure that information provided to Health Canada can be reconciled.

In order to implement these measures, Canntrust's board of directors has determined that it is necessary to destroy approximately $12-million of biological assets and approximately $65-million worth of inventory that was not authorized by Canntrust's licence. The exact amount of material destroyed will be validated and verified once the destruction is complete. The inventory being destroyed includes product that was returned by patients, distributors and retailers. Given the status of its licences, the company is unable to process the material being destroyed or sell it to other licensed producers. The destruction process will allow the company to free up much needed capacity to both implement remediation measures and store material that has been grown and processed in accordance with the company's licence since April 5, 2019.

The destruction of the impacted inventory is both an essential and integral part of Canntrust executing its remediation plan, as well as addressing Health Canada's remediation expectations. The company will provide a detailed remediation plan to Health Canada on or before Oct. 21, 2019. This plan will aim to address all of the measures identified by Health Canada as necessary for the reinstatement of the company's licences.

"Canntrust is confident that its detailed remediation plan will not only address all of the compliance issues identified by Health Canada, but it will also build a best-in-class compliance environment for the future," stated Robert Marcovitch, the company's interim chief executive officer. "We have already made significant progress in these efforts. Our goal is to meet and exceed Health Canada's regulatory standard, and to rebuild the trust and confidence of our primary regulator, investors, patients and customers."

We seek Safe Harbor.

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