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The Canadian cannabis producer CannTrust Holdings will destroy $77 million Canadian dollars ($58.2 million) worth of product in an effort to regain regulatory compliance.
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CannTrust said on Monday evening that it will destroy CA$12 million of plants and CA$65 million of inventory that was not authorized by its license. The destruction process will allow the company to get back into accordance with its license.
Shares rallied nearly 33 percent in U.S. trading on Tuesday.
“CannTrust is confident that its detailed remediation plan will not only address all of the compliance issues identified by Health Canada, but it will also build a best-in-class compliance environment for the future,” interim CEO Robert Marcovitch said in a press release.
“We have already made significant progress in these efforts. Our goal is to meet and exceed Health Canada’s regulatory standard, and to rebuild the trust and confidence of our primary regulator, investors, patients, and customers.”
CannTrust had its licenses to produce and sell cannabis suspended on Sept. 17 after regulators discovered in late 2018 and early 2019 the company was illegally growing thousands of kilograms of product in unlicensed parts of its greenhouse in Pelham, Ontario. It was later discovered that CannTrust had also skirted regulations at its plant in Vaughan, Ontario.
The company plans to provide an update on or before Oct. 21, 2019.