Shares of Canadian cannabis company CannTrust (CTST) were down more than 20% in trading Monday after the company announced its greenhouse facility in Pelham, Ontario, was audited by Health Canada and found "non-compliant."
The company said that it has accepted Health Canada's finding that it was non-compliant with certain regulations and has "taken actions to ensure current and future compliance."
Health Canada has placed a hold on 5,200 kilograms of dried cannabis that was harvested from five unlicensed rooms at the facility until it deems CannTrust compliant with regulations.
Additionally, CannTrust said that it has instituted a voluntary hold on 7,500 kilograms of dried cannabis that was produced in the unlicensed rooms.
Regulators said they observed the growing of cannabis in the five rooms between October 2018 and March 2019. The company didn't receive licenses for the growing rooms until April 2019.
"Our team has focused on building a culture of transparency, trust and excellence in every aspect of our business, including our interactions with the regulator. We have made many changes to make this right with Health Canada. We made errors in judgment, but the lessons we have learned here will serve us well moving forward," said CEO Peter Aceto.
CannTrust declined 21% to $3.90 on Monday.