More Trouble For CannTrust Causing Stock To Plunge Again

Marco Green
August 13, 2019

Not too long ago, CannTrust was frowned upon by Health Canada, as the former was supposedly growing cannabis without the necessary licenses.

The regulator also found that two new areas were constructed without prior approval and that security as well as quality assurance investigations were inadequate at the facility, while operating procedures did not to meet requirements.

Health Canada's probe could result in the suspension or termination of CannTrust's cannabis licences and fines up to $1 million.

Recently, the company's CEO was sacked and the chairman for the board of directors was asked to resign. It is under investigation by both Health Canada and the Ontario Securities Commission, and has hired USA investment bank Greenhill & conduct a "strategic review" that is exploring a possible sale of the company or its assets.

The stock was trading down 23 per cent to $3.25 at 9:43 Toronto, following a sudden 40 per cent jump at the close of trading on Friday. Several analysts have suggested that Health Canada will force CannTrust to destroy this inventory, which could compound the nationwide-wide shortage of legal cannabis.

"PA2A-E are not licenced but we have moved the encapsulation equipment into them and will begin running it next week; PA5 has been modified and is not approved for storage but we are storing product in it", Mr. The Company operates its Niagara Perpetual Harvest Facility in Pelham, Ontario, and prepares and packages its product portfolio at its manufacturing centre in Vaughan, Ontario. In addition, CannTrust has instituted a voluntary hold of approximately 7,500kg of dried cannabis equivalent at its Vaughan manufacturing facility that was produced in the previously unlicensed rooms. As of December 2018, 311 employees were working at the Vaughan facility, more than at its greenhouse in Pelham. CannTrust has accepted Health Canada's findings and remedial actions are underway.

CannTrust said Friday that the auditor's decision to revoke its reports was prompted by the company's caution against relying on financial statements for those time frames, as well as the recent sharing with KPMG "of newly uncovered information from the special committee's investigation, including information that led to senior leadership changes".

US -listed shares of the Canadian grower, down 36 per cent in the past month after it suspended sales, fired its chief executive officer, disclosed a formal investigation by local regulators and said its results may have to be restated, fell another 26 per cent in early trading to $2.30.

The Company's CEO Robert Marcovitch stated: "We are continuing to work hard to regain the trust of Health Canada, our patients, shareholders and partners".

Other reports by Click Lancashire

Discuss This Article