A move to put part of Health Canada’s inspection procedure online may have contributed to the debacle currently surrounding licensed producer CannTrust Holdings (CannTrust Holdings News, Stock Quote, Chart TSX:TRST), says the company’s former president Brad Rogers, who points out that the avalanche of requests for licenses effectively forced Health Canada to forego physical inspections in favour of online input from cannabis operations.
Last week, Vaughan, Ontario-based CannTrust announced that Health Canada had placed part of its inventory of dried cannabis on hold after allegations surfaced that the company had been growing plants in five unlicensed rooms at one of its greenhouses. At the same time, a former CannTrust employee has alleged that employees were asked to put up fake walls to hide plants from inspectors. The revelations have plunged the company’s share price and more widely have shaken the fledgling pot industry, an already risky space which has seen dozens of companies go public during the last two years.
Speaking to BNN Bloomberg on Monday, Rogers said he was shocked by the news concerning CannTrust.
“This is an absolute surprise to me,” said Rogers, now CEO of US cannabis company Red White & Bloom. “I can tell you this, there are 700-plus employees [at CannTrust] who really care about what they do and it would be sad to see any kind of license disruption, production disruption or employment disruption because that’s a great company.”
“How Health Canada handles it will be up to them but it would be a shame to shut that company down or to do anything punitive to impact the people who really care about the business and who are doing great work there,” he says.
Rogers, who left CannTrust last November when the company brought in banker Peter Aceto as CEO, says that Health Canada’s procedure for vetting new licensees was altered last fall as the number of applications from businesses across Canada ballooned.
“As I was leaving, they actually changed the system and went to an online system which was to a degree arduous and I think a lot of things got rippled in that world,” he says. “It got to a point where there was an insatiable appetite for licenses and Health Canada was inundated with license applications and so to get through the process, they tried to streamline it by accepting an evidence package.”
“So, you sent in pictures of your facility and security screenshots, and they sort of vetted it remotely and then came in for a physical inspection later,” he says. “It was a good process, but the building of walls and such, that’s really outside as far as I was concerned.”
CannTrust is expected to respond this week to Health Canada’s report, with the regulator then to come to a decision on enforcement sometime in the future.