CannTrust Holdings Inc. has submitted a remediation plan to Health Canada as part of its efforts to regain the regulator’s trust and return to compliance.
The embattled cannabis producer says it’s aiming to complete all of the activities detailed within the plan by the end of the first quarter of next year, according to a release late Thursday.
Health Canada suspended the company’s sales and production licences in September after a number of regulatory missteps came to light, starting in July.
The plan includes “an expanded internal training program, a strengthened governance and operations framework, infrastructure enhancements, and prescribed accountabilities and timelines for a variety of specified tasks,” the company said.
“CannTrust is confident that its remediation plan addresses all the compliance issues identified by Health Canada,” Robert Marcovitch, CannTrust’s chairman and interim CEO, said in the release.
The company also said that in the face of “significantly reduced operations,” it is temporarily laying off as many as 140 people, or approximately one-quarter of its workforce, through a series of phased layoffs beginning in October until the end of the year.
The staff cuts announced Tuesday will result in monthly cost savings of about $400,000. CannTrust said it expects severance costs of up to $800,000 if the employees are not recalled within 35 weeks.
Tuesday’s staff reductions follow last month’s announcement that CannTrust was laying off 180 people in an effort to cut costs. CannTrust suspended its operations in September while Health Canada investigated its facilities in Pelham and Vaughan, Ont.
“This was a difficult decision, but it is imperative that our workforce reflects the current requirements of our business,” Marcovitch said.
“Reducing the [company’s] current operating expenses supports our financial sustainability, and places us in the best position to fully resume production upon the reinstatement of our [licences]. We look forward to rehiring at that time.”
Canaccord Genuity analyst Derek Dlay said CannTrust is taking “important first steps” with its new plan to return to regulatory compliance with Health Canada in a note to clients on Friday.
“Having said that, there is still significant uncertainty whether CannTrust will eventually achieve full compliance in the near term,” Dlay added.
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