It doesn’t appear to have affected the share price a whole lot, but Hydropothecary (THCX.V) announced yesterday that Health Canada had tested a batch of its product and found the banned pesticide myclobutanil to be present.
That’s the same substance found in Mettrum and Organigram (OGI.V) product late last year, which saw both companies endure investigations, recalls, and added restrictions on their licensing.
The company will institute a ‘voluntary stop-sale’ while they test further product.
THCX says it instituted voluntary testing earlier this year for anything showing levels of banned substances above the level of 0.05 ppm, but Health Canada picked up its presence in mother plants at the level of 0.02 ppm.
How did it get there? Well, the company says it’s investigating that, but the answer is almost definitely, ‘they put it there.’ Likely some time ago (hence the low levels), and perhaps before THCX’s last foul up, when they had to, according to reports I’ve heard, incinerate two harvests due to similar issues.
For now, no recall has been issued, as the positives were found in mother plants, which are used to spawn new plants which are to be later processed and sold to patients. Once the younger plants have been tested, THCX will decide on whether a product recall will be necessary.
A cynic might suggest the company was only testing for anything over 0.5 ppm because they didn’t want to trigger a positive result they’d have to confess to. Even if you were exceedingly generous, you’d have to say it’s a slight on the company that they didn’t detect what Health Canada did.
Either way, this is not the first dumb screw up from the Hydropothecarians, continuing a long line of whoopsies since they received their license two years ago.
Initially the company business plan was to be the ‘grower of choice for rockstars’, with $30+ per gram product and late night facility tours given to music producers. Once reminded that they were supposed to be supplying ‘patients’, not parties, they dropped their prices to a level closer to the industry standard.
Ongoing facility problems delayed plans to go to a public listing earlier in its life, and the company recently admitted it had recalled product, amid the Organigram/Mettrum messabout.
Organigram is currently facing the prospect of class action lawsuits from patients who claim they were sickened by the tainted product.
THCX hit the market in late March at a price of around $2, a level it has stayed at basically since. The positive test announcement came during a trade halt. In the minutes after trading resumed, the stock plummeted, before another trade halt ‘pending news’ was implemented.
The stock has since bounced back this morning, up to $1.83 at the time of writing, and currently sits on a market cap of $89 million. It remains the only licensed producer in the province of Quebec. Cronos (MJN.V) is a minority stakeholder in the company.
— Chris Parry