CannTrust Holdings says Health Canada has ruled that the company's greenhouse facility in Pelham, Ont., in not in compliance and placed an inventory hold on about 5,200 kilograms of dried cannabis.

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Shares in CannTrust Holdings Inc. fell after the cannabis producer said Health Canada has ruled that the company’s greenhouse facility in Pelham, Ont., is not in compliance with certain regulations and warned of temporary product shortages.

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The shares were down $1.06 or about 16 per cent at $5.40 in early trading on the Toronto Stock Exchange after falling as low at $5.03 just after the market opened.

The company said Monday the rating was based on observations by the regulator regarding the growing of cannabis in five unlicensed rooms and inaccurate information provided to Health Canada.

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CannTrust says the regulator has placed an inventory hold on about 5,200 kilograms of dried cannabis harvested from the rooms. In addition, CannTrust has placed a voluntary hold of about 7,500 kg of dried cannabis equivalent at its Vaughan, Ont., manufacturing facility that was produced in the previously unlicensed rooms.

CannTrust says the growing in the unlicensed rooms took place from October 2018 to March 2019 when it had pending applications for the rooms with Health Canada.

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