CannTrust Holdings Inc. (CTST) said late Thursday it's suspending sales and shipments of all of its cannabis products and appointing a committee of independent directors to investigate problems at the Canadian supplier of medical and recreational cannabis.
The sales and shipment suspension will continue "while Health Canada visits and reviews its Vaughan, Ontario manufacturing facility," the company said in a statement.
Earlier this week Canadian authorities found the company's greenhouse facility in Pelham, Ontario to be "non-compliant" with Canadian health regulations and placed a hold on 5,200 kilograms of dried cannabis that was harvested from five unlicensed rooms at the location.
The company said "the impact of these matters on CannTrust's financial results are unknown until the regulatory review process is complete."
U.S. listed shares of CannTrust fell 30 cents, or 9.6%, to $2.81 in after-hours trading. For the week, shares are down 45%.
Jim Cramer told his Mad Money audience on Thursday night that he's had to reevaluate cannabis stocks.
Last year, the stocks caught fire after Canada legalized recreational use.
But now the leader in the industry, Canopy Growth CGC (CGC) has seen pricing decline and production slow as costs began to skyrocket. These changes led to CEO Bruce Linton's firing at the hands of its biggest investor, Constellation Brands (STZ) .
Cramer said he still sees Canopy as the leader in the sector. He also still recommended Cronos Group (CRON) , which received an investment from Altria (MO) , as well as GW Pharmaceuticals (GWPH) . Cramer suggested investors avoid the rest of the cannabis stocks and even cannabis ETFs, as they lump bad names with the good ones into one security.In action during the regular session Thursday, the Alternative Harvest ETF ( MJ) fell 24 cents, or 0.78%, to $30.66. The AdvisorShares Pure Cannabis ETF ( YOLO) fell 33.99 cents, or 1.52%, to $21.95. The Horizons Marijuana Life Sciences ETF ( HMLSF) fell 28.14 cents, or 2.08%, to $13.27.