Actions undertaken by Quebec cannabis producer Hexo Corp. to proactively rectify unauthorized cultivation were deemed “acceptable” by Canada’s federal health department.
The company disclosed late Friday that unlicensed cultivation took place inside part of a facility the company acquired last spring.
Hexo’s 260 million Canadian dollar ($180 million) purchase of Newstrike Brands, owner of Up Cannabis, was completed in May.
The Quebec company said on July 30 it discovered that marijuana was being grown in an area of Up’s Niagara facility that was not approved by Health Canada.
The regulator corroborated Hexo’s version and timeline of events.
In an emailed statement to Marijuana Business Daily, Health Canada said it was notified by Hexo on July 31 about the unlicensed cultivation.
“Hexo immediately stopped using that area,” the regulator noted.
“In this case, Hexo proactively notified Health Canada and took actions to rectify the situation and return to compliance. Health Canada determined that the actions taken by Hexo to rectify the situation were acceptable,” the regulator said.
Hexo’s quick disclosure to Health Canada over the infraction is in contrast to embattled cannabis producer CannTrust.
In July, a whistleblower alerted Health Canada to unapproved cultivation at CannTrust’s facility in Pelham, Ontario, later resulting in the regulator suspending the company’s federal licenses.
The Up Cannabis site in Niagara, Ontario, was initially granted a license in March 2018.
The following September, Up submitted an amendment to add an area for cultivation, but the proposal was not approved by Health Canada, the body said.
Not long after Hexo’s acquisition of Up Cannabis closed, the Quebec company subsequently shuttered the Niagara facility over financial concerns – unrelated to the unlicensed cannabis – in an effort to “rightsize its operations.”
The company shifted production to its cultivation facilities in Gatineau, Quebec and Brantford, Ontario.
Hexo said it could reopen the Niagara cultivation center should demand rise.
Matt Lamers is Marijuana Business Daily’s international editor, based near Toronto. He can be reached at [email protected].