Cannabis stocks slipped on Monday, as the CannTrust scandal continued to shake investor confidence, with news emerging about further breaches at a second Ontario facility.
The North American Marijuana Index, which tracks the top cannabis stocks in the US and Canada, dropped 0.9% at 205.94 points. Elsewhere, the Horizons Marijuana Life Sciences Index ETF dropped 0.9% to C$16.74, while the OTCQX Cannabis Index dropped 1.2% to 689.1 points.
Despite the lagging sector, a number of cannabis stocks were outperforming Monday.
BevCanna Enterprises Inc (CSE:BEV) shares were on the rise after the Vancouver-based firm announced it is expanding its product line of cannabis-infused beverages with the launch of a new label, Grüv Beverages.
Shares were up 12.5% at C$0.72 by Monday midday.
The new line encompasses a range of CBD-infused iced tea beverages and was developed after BevCanna completed a North American-wide consumer study, focusing on product and consumption preferences within the cannabis-infused beverage market.
Also gaining ground Monday was Nextleaf Solutions Ltd (CSE:OILS) (OTCQB:OILFF), which announced it has completed two government-funded research and development projects, leading to innovation in the cannabis extraction process, according to the firm.
Shares of Nextleaf were up 3.3% at C$0.62 in Canadian trading.
The company worked for a year with the National Research Council of Canada Industrial Research Assistance Program to develop a treatment process to remove chlorophyll, carotenoids and other elements from crude cannabis extract. The Vancouver-based company also worked with the University of British Columbia and the British Columbia Institute of Technology on a project to repurpose cannabis biomass after extraction.
"These two R&D projects speak to Nextleaf's talent for research collaboration and technological innovation, key pillars in our growth strategy," said CEO Paul Pedersen in a statement.
READ: Nextleaf ties the bow on a pair of federally-funded cannabis extraction R&D projects in Canada
Leading the laggards and the headlines Monday was CannTrust Holdings Inc (TSE:TRST) (NYSE:CTST), where shares tumbled sharply after the company said Health Canada has found a second facility "non-compliant with certain regulations."
Shares dropped 7.7% to C$2.77 in Toronto, and were down 6.2% at US$2.11 in New York.
CannTrust has been embroiled in a scandal since early July after Health Canada found it was growing cannabis in unlicensed rooms at its Vaughan, Ontario facility.
According to a company release, the firm noted Health Canada has flagged the company for improper cannabis storage procedures, inadequate quality assurance, failing to retain documents and inadequate security protocols at a second facility, also located in Vaughan, Ontario.
CannTrust said it accepts the latest findings and expects to propose a remediation plan to Health Canada.
Other laggards Monday included iAnthus Capital Holdings Inc (CSE:IAN) (OTCMKTS:ITHUF), down 4.4% at US$2.82 in New York, off 3.6% at C$3.74 in Toronto.
Contact Katie Lewis at [email protected]