VAUGHAN, ON, Aug. 12, 2019 /CNW/ - CannTrust Holdings Inc.
("CannTrust" or the "Company", TSX: TRST, NYSE: CTST) provided an
interim update concerning certain recent developments affecting the
Company.
Heath Canada Report for Vaughan Manufacturing
Facility
After trading hours on Friday, August 9,
2019, CannTrust received a report from Health Canada
notifying the Company that its manufacturing facility in
Vaughan, Ontario has been rated
non-compliant with certain regulations. CannTrust has accepted
Health Canada's findings and remedial actions are underway.
Heath Canada's rating was based
on observations made during an inspection completed during the
period July 10-16, 2019, which
noted:
- The conversion of five rooms from operational areas to storage
areas, which were used for storage since June 2018 without prior approval of Health
Canada;
- The construction of two new areas without prior approval of
Health Canada, one of which was used to store cannabis since
November 2018;
- Insufficient security controls at the manufacturing
facility;
- Inadequate quality assurance investigations and controls;
- Standard operating procedures that did not to meet the
requirements under regulations; and
- Documents or information that were not retained in a manner to
enable Health Canada to complete its audit in a timely manner.
As previously announced, the Company implemented a voluntary
hold on the sale and shipment of all cannabis products while Health
Canada reviewed its Vaughan,
Ontario manufacturing facility. CannTrust continues to work
closely with Health Canada and will provide further details of the
hold and other developments as they become available.
Under the direction of the recently constituted independent
Special Committee of the board of directors of the Company and
newly-appointed interim CEO, Robert
Marcovitch, the Company has already begun the process of
investigating and remediating the root causes of any non-compliance
and expects to propose a robust remediation plan to Health
Canada.
The Company's CEO Robert
Marcovitch stated: "We are continuing to work hard to regain
the trust of Health Canada, our patients, shareholders and
partners. We have retained independent consultants who
have already started addressing some of the deficiencies noted in
Health Canada's report. We are looking at the root causes of
these issues and will take whatever remedial steps are necessary to
bring the Company into full regulatory compliance as quickly as
possible."
Although the Company, under the supervision of the Special
Committee, is preparing a remediation plan for submission to and
consideration by Health Canada, Health Canada has advised the
Company that it is currently unable to provide any guidance about
the timing or content of its decisions concerning the Company.
Prepayment of Meridian Loan
The Company has also recently pre-paid the outstanding mortgage
of approximately $13.3 million to
Meridian Credit Union which was secured by its greenhouse in
Pelham, Ontario, as well as
associated interest and administrative costs. Meridian is
arm's-length to the Company and this loan represented the Company's
only secured indebtedness.
About CannTrust
CannTrust is a federally regulated licensed producer of medical
and recreational cannabis in Canada. Founded by pharmacists, CannTrust
brings many years of pharmaceutical and healthcare experience to
the medical cannabis industry and serves medical patients with its
dried, extract and capsule products. The Company operates its
Niagara Perpetual Harvest Facility in Pelham, Ontario, and prepares and packages its
product portfolio at its manufacturing centre in Vaughan, Ontario. The Company has also
purchased 81 acres of land in British
Columbia and expects to secure over 240 acres of land in
total for low-cost outdoor cultivation which it will use for its
extraction-based products.
Forward-Looking Statements
This press release contains "forward-looking information" within
the meaning of Canadian Securities laws and "forward-looking
statements" within the meaning of the United States Private
Securities Litigation Reform Act of 1995 and other applicable
United States safe harbor laws,
and such statements are based upon CannTrust's current internal
expectations, estimates, projections, assumptions and beliefs and
views of future events. Forward-looking information and
forward-looking statements can be identified by the use of
forward-looking terminology such as "believes", "expect",
"likely", "may", "will", "should", "intend", "anticipate",
"potential", "proposed", "estimate" and other similar words,
including negative and grammatical variations thereof, or
statements that certain events or conditions "may", "would" or
"will" happen, or by discussions of strategy.
The forward-looking information and statements in this news
release include statements relating to the corrective action being
taken by the Company. Forward-looking information and statements
necessarily involve known and unknown risks, including, without
limitation: results of Health Canada's investigation, including
orders and compliance measures required by Health Canada and their
impact on the operations and financial condition of the Company;
the Company's implementation of remediation plans and related
actions; regulatory approval; risks associated with general
economic conditions; adverse industry events; loss of markets;
future legislative and regulatory developments in Canada, the United
States and elsewhere; the cannabis industry in Canada generally; and, the ability of
CannTrust to implement its business strategies.
Any forward-looking information and statements speak only as of
the date on which they are made, and, except as required by law,
CannTrust does not undertake any obligation to update or revise any
forward-looking information or statements, whether as a result of
new information, future events or otherwise. New factors emerge
from time to time, and it is not possible for CannTrust to predict
all such factors. When considering these forward-looking
information and statements, readers should keep in mind the risk
factors and other cautionary statements in CannTrust's Annual
Information Form dated March 28, 2019
(the "AIF") and filed with the applicable Canadian securities
regulatory authorities on SEDAR at www.sedar.com and filed as an
exhibit CannTrust's Form 40-F annual report under the United States
Securities Exchange Act of 1934, as amended, with the United States
Securities and Exchange Commission on EDGAR at www.sec.gov. The
risk factors and other factors noted in the AIF could cause actual
events or results to differ materially from those described in any
forward-looking information or statements.
The TSX and NYSE do not accept responsibility for the adequacy
or accuracy of this release.
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SOURCE CannTrust Holdings Inc.