Producer of tainted medical marijuana responds to proposed lawsuit

A New Brunswick-based medical marijuana company says it will "vigorously" defend itself if a class action lawsuit goes ahead over pesticides found in company products.

Organigram Inc. issued voluntary recalls of almost all of its products sold last year after residual levels of unapproved pesticides were found.

On Friday, Wagners law firm in Halifax filed a notice of action in Nova Scotia Surpreme Court against the federally licensed producer and its parent company, Organigram Holdings Inc.

• Proposed class action filed against producer of pot tainted with pesticide
• Organigram tightens medical marijuana production after 2016 recall

Lawyer Ray Wagner said in an interview that hisfirm has received hundreds of calls from Organigram consumers who are worried about the potential impact of pesticides on their health.

The proposed lawsuit alleges negligent "design, development, testing, manufacturing, distribution, sale and marketing of [Organigram's] purported organic medical cannabis," the firm said.

The action also seeks refunds for consumers on recalled products, and accuses Organigramof breaching its contract with consumers to provide certified organic products.

Customer refunds

In a news release Tuesday, Organigram CEO Denis Arsenault responded to the legal action, saying the producer will "vigorously defend our company and its actions related to the product recall."

He added that the company offered all non-insured clients an account credit equal to the purchase price of the recalled product.

The majority of clients are satisfied with this response, he said, and any claims by Wagner's that customers were offered a refund at first are erroneous.

"We have been in constant communication with clients who purchased recalled product," he said.

"We have been clear that Organigram will meet their needs by providing account credits valued at 100 per cent of that product's value and will make freshly harvested and tested product available to them."

Posting test results

Starting next week, Organigram said, it will post all test results of its harvested marijuana on its website.

The company is the only producer of medical marijuana in New Brunswick that has been approved by Health Canada.

It issued voluntary recalls of almost all of its products sold last year after residual levels of two unapproved pesticides myclobutanil and bifenazate were found.

When burned, myclobutanil produces hydrogen cyanide, which interferes with how oxygen is used in the body and can cause headaches, dizziness, nausea and vomiting.

As a result of the recall, the Moncton company's organic certification was suspended in January.

In the news release, Organigram said it recently completed an investigation into events leading to the December and January recalls and has put new growing and harvesting protocols in place.

Organigramdid not say what it discovered abouthow the pesticides got into the company's products.

Marijuana harvested after the recall has tested negative for pesticides, the news release said.

"With the new procedures in place, we are fully confident in our ability to deliver high-quality product to our clients," said Arsenault.

Financial impact

News of the lawsuit caused a sharp decline in Organigram Holding Inc.'s share price.

On Tuesday, shares dropped by 32 cents, or 12.96 per cent, to $2.15.

Over the last five days, shares dropped 14 per cent and are down 25.86 per cent to date from last year.

Arsenault said the company has allocated $2.26 million this quarter to cover losses associated with the recalls.

In an email to the CBC, he added that the share price does not reflect the business's long-term potential.

"We remain confident that Organigram has addressed the issues with the recall [and] will exit the situation a stronger company."