CannTrust Stock Hits a New Low After Cannabis License Suspended

CannTrust stock

CannTrust stock continues to move lower for the second straight session and falls another 8%, extending yesterday's fall of 14%. CannTrust Holdings (TSX:TRST) (NYSE:CTST) saw heavy selling pressure late Tuesday after Health Canada suspended the company's license to produce and sell cannabis.

Major Blow for Investors

The marijuana sector has gone through a lot of pain over the course of the past few months, and many stocks have been beaten down considerably during this period. However, nothing can quite compare to the troubles that have engulfed Canadian cannabis operator CannTrust Holdings over the past few months. Back in July, Health Canada found that the company had been cultivating marijuana in five unlicensed rooms at its Pelham facility. That led to the discovery of a range of regulatory violations and yesterday, CannTrust got a notice confirming the suspension of its license from Health Canada. The Canadian regulator had been investigating the company over the past weeks.

It is an understatement to say that this is a major blow for the company, considering the fact that it was only in April that it had been awarded the cultivation license by Health Canada. That being said, CannTrust Holdings has gone into granular details about the suspension notice that it got from the regulator yesterday.

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At the time of writing, CannTrust stock is down 9% at $1.18 after hitting an all-time low of $1.13 earlier in the session.

The company stated that the suspension of the standard cultivation is partial in nature. On the other hand, the licenses meant for medical sales, research, standard processing, and for cannabis drugs have been completely suspended by Health Canada.

That being said, it is only natural for people to look for positives amidst all the doom and gloom. It has emerged that the company is going to be allowed to cultivate and harvest the batches of cannabis that currently exist. However, CannTrust will not be allowed to distribute or sell the product that is going to be produced. The whole thing is not yet done and dusted.

As per a section of the Cannabis Act, the company needs to prove that the grounds for the suspension was unfounded or demonstrate that the grounds for the suspension are no longer valid in order to regain its license. In other words, the company will need to clean up its act considerably to have any hope of having its licenses reinstated.

CannTrust stock is the worst performing cannabis stock since late March, with a slump of almost 88%.

>> Read More CannTrust News

Featured image: DepositPhotos © nmcandre

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