Health Canada is now doing quality checks on the company's products, a process that is expected to take up to two weeks.
"These rooms were constructed in accordance with regulations and good production practices, and licences were issued for each of the five rooms in April 2019", the company said. There are 12 rooms in total at the facility. The company has until July 18 to respond to Health Canada's non-compliance inspection report.
According to Aceto, Health Canada inspectors made a surprise visit to the Niagara facility in June and issued a report on the company's non-compliance on July 3.
CannTrust is a federally regulated licensed producer of medical and recreational cannabis in Canada. 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-priced outdoor cultivation which it will use for its extraction-based products.
"CannTrust is clearly acknowledging that mistakes were made here". As a result, Health Canada has placed a hold on 5,200kg of dried cannabis produced from those five rooms until the regulator is satisfied the products are compliant with federal regulations.More news: Labour should automatically expel anti-Semites, says Sir Keir Starmer
The discrepancy, according to Health Canada, is due to the fact that it seized finished and unfinished product from CannTrust, some of which was in the final stages of drying and was not weighed in order to avoid product contamination.
USA -listed CannTrust Holdings (NYSE: CTST) tumbled over 22 percent on Monday after the company admitted that Canadian regulators had seized its cannabis after discovering it was growing weed in unlicensed facilities.
"We have made many changes to make this right with Health Canada", CannTrust chief executive Peter Aceto said in a release.
The marijuana producer confirmed that one person was sacked at its Niagara facility related to the unregulated growing.
At this time, the impact of these matters on CannTrust's financial results are unknown until Health Canada completes its quality testing of product from Pelham which is now on hold.More news: Aston Villa complete signing of Brentford defender
"There remains a high degree of uncertainty with respect to the potential for future legal and regulatory repercussions", Kreindler said in a note to clients.
CannTrust Holdings Inc.'s Danish partner says it has quarantined a batch of products received from the licensed producer in connection with Health Canada's recent discovery of illegal growing operations at its Ontario greenhouse. Results are expected in 10 to 12 business days.
Ryan Tomkins, an analyst with Jefferies, said in the near-term there will "undoubtedly be a financial impact".
All product sold from the impacted rooms has passed quality control testing at Health Canada certified labs as well as CannTrust's own quality control processes and safety reviews.
As of market close, shares of CannTrust in NY had dropped to a price of US$3.83, while in Toronto the stock was valued at C$5 per share.More news: Who Are the Highest-Paid Celebrities?
Note to readers: This is a corrected story.