CannTrust Trouble Continues: New Report Claims Company Sold Illegal Black Market Cannabis

According to a BNN Bloomberg report, CannTrust Holdings Inc. (TRST.TO)(CTST) used black market seeds brought in by senior operating staff at its Pelham, Ont. facility late last year, tainting the legal market with illicit supply.

The Canadian business television network reported early Friday that workers at the cannabis producer who has been in the news recently for multiple issues that workers changed the name of as many as 20 cannabis strains to match those the company was licensed to sell for medical and recreational use, citing internal company documents and four sources familiar with the matter.

Read more about CannTrust woes, in which Benzinga calls one of the 5 Biggest Cannabis Business Scandals: From CannTrust To PotNetworks.

A quick background for those unaware, top executives at CannTrust have been accused and reported to grow cannabis in rooms where licenses were only pending, not approved. This made the cannabis illegal grown. pending licenses. The company went on to even receive those licenses, but it was a month after getting busted. CannTrust even filmed promotional video in front of the illegal grow rooms that used temporary walls to be shielded from inspections.

Since that news the company has been in a free-fall as the stock has tumbled, the accused executives were booted out of the company and product was returned to the company unsold. Health Canada seized some of the company’s inventory and is currently investigating all the issues and has yet to make a decision as to how it will punish the company.

From growing illegally to changing strain names, is there any trust that can remain in CannTrust?

A CannTrust spokesperson told BNN Bloomberg that “to the best of our knowledge, no product using seeds from unauthorized external sources was introduced into the market.”

The Ontario-based cannabis company has laid off 180 people, about 20% of its workforce, on Thursday as it grapples with a litany of accusations, including the use of fake walls to hide illegal activity from regulators.

CannTrust’s licenses also remain in jeopardy amid an ongoing Health Canada probe.

In July, a former employee blew the whistle on alleged illegal activity, sparking an investigation that determined cannabis was grown in unlicensed rooms. Under the Cannabis Act, the regulator may suspend a licence or permit to protect public health or safety.

Thousands of kilograms of dried cannabis have been put on hold by both Health Canada and the company. CannTrust has voluntarily suspended all sales and distribution. The company has noted that Health Canada has not ordered a recall on any of its products.

The Ontario government said earlier this week that it intends to return almost $3 million worth of cannabis, citing a breach of its supply agreement.