CannTrust Stock Nosedives: Executives Aware of the Illegal Cultivation

CannTrust stock

CannTrust stock has been going through a tough time as shares of CannTrust Holdings (TSX:TRST) (NYSE:CTST) slump another 22% to a new low this morning.

Major Blow for CannTrust Stock

Cannabis company CannTrust Holdings landed in major trouble at the beginning of July, when it emerged that Health Canada had found that the company had produced cannabis in five unlicensed rooms in its Pelham facility.

CannTrust stock has so far dropped by as much as 60% this month after the company had to recall its products and withhold the cannabis that had been produced in the unlicensed facilities.

Things have now gone from bad to worse for the Canadian company, as it has now emerged from internal company e-mails that CannTrust executives were aware of the illegal cultivation. The revelations have been made in the Globe and Mail newspaper, which is based out of Toronto.

According to the report that was published today, e-mails have revealed that the Chief Executive Officer of CannTrust Holdings, Peter Aceto, and Chairman Eric Paul, in addition to other top executives in the company, were aware of the illegal activity. As a matter of fact, the compliance officer of the company, Graham Lee, had in fact commented in an e-mail that CannTrust had "dodged some bullets." Lee had made the comment with regards to inspection by the Canadian authorities and their failure to find the five unlicensed room inside the Pelham facility.

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At the time of writing, CannTrust stock has fallen by as much as 20% to $2.09 after hitting a new 52-week low of $2. On the Canadian side, TRST stock is down 22% at $2.68.

The whole thing had been going on from October 2018 up until March this year. The company got its license in April and had been looking to make a mark in the industry. However, it will almost certainly have to go through an investigation by Health Canada, and if the authorities are so inclined, then it could lead to the cancellation of CannTrust’s license.

That being said, the one thing that could be said in favor of the company is that it has fully co-operated with the authorities so far. Not only has CannTrust Holdings voluntarily withheld cannabis produced during the period from another facility but also recalled products.

CannTrust stock has lost about 60% so far this year, and 80% from its recent peak price of $11.

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