Shares of beleaguered Canadian cannabis company CannTrust (CTST) were down nearly 25% in trading Monday after the company announced that regulators from Health Canada have deemed another one of its manufacturing facilities non-compliant.
Health Canada regulators initiated their latest inspection between July 10 and July 16, finding that five rooms were converted from operational areas to storage areas without prior consent.
The regulators also found the construction of two new areas without prior approval, one of which was used to store cannabis since November 2018. The facility in Vaughan, Ontario, also was found to have insufficient security controls, inadequate quality assurance investigations and other issues.
Last week, CannTrust shares got smoked after the company announced that its auditor, KPMG LLP, withdrew its report on the company's financial statements for full year 2018 and its interim report on May 13.
CannTrust said there was significant uncertainty with respect to the potential impact of the pending decision by Health Canada regulators on the value of its inventory after the agency said that CannTrust was growing pot in illegal grow houses.
Additionally, CannTrust said that it recently shared "newly uncovered information" from its own special committee's investigation - an investigation that led to the ouster of its CEO on July 25 - that called into question the validity of its financial statements.
The stock fell 28.39% on Monday to $2.27.