A federally licensed medical marijuana company whose products tested positive for a dangerous banned pesticide says it has determined the main source of the problem – an employee who sprayed the chemical on plants without authorization.

The announcement by Hydropothecary Corp. comes after a month-long investigation that began when Health Canada conducted a random spot check at the company's Gatineau facility and turned up evidence of myclobutanil. The pesticide, which is used to kill mildew, is not permitted for use on cannabis because it can cause serious health issues when inhaled.

Hydropothecary chief executive Sébastien St-Louis said the employee used the pesticide on three mother plants at the facility. Clippings are taken from the mothers to create broader crops for harvest, and the pesticide was passed to subsequent generations of plants.

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Investigation: What's in your weed?

"It looks like, pretty conclusively, that it was an employee that applied myclobutanil to three specific plants," Mr. St-Louis said. "That employee is no longer with us."

The company conducted further testing and discovered some starter plants bought from the so-called grey market in 2014, a process that was approved by Health Canada, also came contaminated with myclobutanil.

As a result, the company is expanding a previously announced recall of contaminated products to 19 lots sold between July, 2015, and March, 2017. However, as is the case with several other recalls in the Canadian medical marijuana sector this year, this action will have little protective effect, because many of the products would have already been consumed.

Mr. St-Louis said the company has taken steps to prevent such problems from happening again, such as better surveillance of all applications made to plants, including watering, and more oversight by senior staff. Any plants brought in from outside the company will be quarantined and tested, he said.

"It's critical that we be transparent in everything that we do," Mr. St-Louis said. "If we continue to do that, and we refine our processes, these events will be fewer and farther between."

Myclobutanil is banned in several U.S. jurisdictions where cannabis is legal because it is not considered safe if inhaled, particularly on a regular basis. Although it is used on crops such as grape vines and almonds, its manufacturer considers it safe only when it is ingested on food and can be metabolized by the digestive system. It is not approved for crops that are smoked, such as tobacco and cannabis, because it enters the bloodstream directly through the lungs.

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Hydropothecary is the fourth company to have problems with banned pesticides in recent months as Health Canada tries to clamp down on their unauthorized use in the industry.

Peace Naturals Project, Mettrum Ltd. and Organigram Inc. have also been found with banned chemicals in products. However, neither Mettrum nor Organigram said they could find the source, raising serious questions about the level of quality control in an industry that bills its products to consumers as pharmaceutical grade, and often sells medicine to patients with compromised immune systems.

Although Mettrum said it could not get to the bottom of the problem, a former employee of the company told The Globe and Mail he saw myclobutanil being applied directly to plants, even though the company knew it was not allowed.

Since the pesticide problems emerged in December, companies that recalled products have issued news releases saying only "trace amounts" of the chemicals were discovered, which appears to minimize the danger.

However, lab experts and toxicologists have told The Globe the amounts found so far exceed what could be considered a trace amount, and that even minute quantities of a chemical can do serious damage to the body if ingested regularly.

Hydropothecary said some of its products were found to contain levels of myclobutanil ranging from 0.01 to 0.13 parts per million. Organigram said its recalled products contained up to 20 ppm of myclobutanil.

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Mr. St-Louis acknowledged the industry is aware there is no allowable limit for banned pesticides such as myclobutanil.