Canada Markets closed

CannTrust grew and sold pot from black market seeds: report

The root system from a cannabis cutting is photographed at the CannTrust Niagara Greenhouse Facility during the grand opening event in Fenwick, Ont., on Tuesday, June 26, 2018. (THE CANADIAN PRESS/ Tijana Martin)

CannTrust Holdings Inc. (TRST.TO)(CTST) used black market seeds brought in by senior operating staff at its Pelham, Ont. facility late last year, tainting the legal market with illicit supply, according to a report from BNN Bloomberg.

The Canadian business television network reported on Friday that workers at the embattled cannabis producer changed the name of as many as 20 cannabis strains to match those the company was licenced to sell for medical and recreational use, citing internal company documents and four sources familiar with the matter.

A CannTrust spokesperson told BNN Bloomberg that “to the best of our knowledge, no product using seeds from unauthorized external sources was introduced into the market.”

The Vaughan, Ont.-based cannabis producer laid off 180 people, about 20 per cent of its workforce, on Thursday as it grapples with a litany of accusations, including the use of fake walls to hide illegal activity from regulators.

CannTrust’s licence remains in jeopardy amid an ongoing Health Canada probe.

In July, a former employee blew the whistle on alleged illegal activity, sparking an investigation that determined cannabis was grown in unlicensed rooms. Under the Cannabis Act, the regulator may suspend a licence or permit to protect public health or safety.

Thousands of kilograms of dried cannabis have been put on hold by both Health Canada and the company. CannTrust has voluntarily suspended all sales and distribution. The company has noted that Health Canada has not ordered a recall on any of its products.

The Ontario government said earlier this week that it intends to return almost $3 million worth of cannabis, citing a breach of its supply agreement.

Yahoo Finance Canada banner

Download the Yahoo Finance app, available for Apple and Android.