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CannTrust Cuts 20% Of Staff As New Revelations Fuel Scandal

September 10, 2019

Embattled Canadian cannabis producer CannTrust laid off 20% of its staff—approximately 180 people—on Thursday as fallout from its cultivation violations continues apace. The cuts primarily came from the cultivation and customer service departments. The company, which has been unable to sell its products since the July revelation that it had erected false walls to conceal unlicensed grow operations at its facility in Pelham, Ontario, said the job cuts will save about C$9 million ($6.7m) annually.

Since Health Canada found that CannTrust was out of compliance, the company has been in crisis. CEO Peter Aceto was discovered to have given his explicit blessing to continuing the illegal grows and was fired, while board chairman Eric Paul was also asked to resign for failing to stop the activity. The company put sales on hold in mid-July and has had significant quantities of product returned by provincial authorities, at considerable cost. Quantities of the illegally cultivated cannabis were shipped to an affiliate in Denmark, which constitutes a crime. Vice president of cultivation Brady Green, operations manager Cameron Fletcher, and vice president of quality operations Andrea Kirk all have left the company in recent weeks. A verdict from Health Canada is still pending, which could range from a fine to complete loss of licensure.

Master grower Green is at the center of new allegations. According to BNN Bloomberg, he and a team introduced and cultivated cannabis seeds sourced from the black market into CannTrust’s Pelham, Ontario facility. The plants were alleged to be unusual strains that CannTrust wasn’t licensed to cultivate or sell. To conceal this, strains like Citradelic Sunset and Code Black OG were relabeled to legitimate strain Cannatonic, despite the plants being at distinctly different points in their lifespan.

Those strains aren’t illegal in a general sense—nothing about their qualities necessarily makes them unsuitable for public use. But, as a licensed producer, CannTrust is required to source all its cannabis seeds and plants from an approved supplier. Selling cannabis of unknown provenance introduces uncertainty in how consumers will react, particularly in a case like this where product apparently made it to market labeled as a different strain.

With sales frozen and Health Canada’s investigation ongoing, it’s unclear how these latest allegations will impact the company. Testing in legal U.S. markets has consistently found that cannabis is routinely mislabeled and varies wildly in genetic makeup. Nonetheless, CannTrust’s multilayered deceptions could damage both consumer and regulatory confidence in the industry.—Danny Sullivan

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