CannTrust Stock Up 3.8% Following Cease-Trade Announcement

CannTrust stock

CannTrust stock is up 3.8% this morning after CannTrust Holdings (TSX:TRST) (NYSE:CTST) announced a cease-trade to deal with regulatory infringements.

A Sign of Good Faith

The Ontario Securities Commission have approved an order sought by the company's management that prohibits the directors and executive officers of the company from trading in CannTrust securities until two full business days after it makes all of its required filings in regard to a series of regulatory scandals that have rocked the company in recent months. The move was seen as a sign of good faith towards investors, as was reflected by this morning's bump in CannTrust stock.

A Rocky Summer for CannTrust Stock

It's been a rocky summer for CannTrust stock after the company disclosed on July 8 that it was under investigation by Health Canada because of unlicensed grow operations in its Pelham facility. Since that initial disclosure, the company has dismissed its CEO and chairman, suspended all sales, commenced an internal strategic review, received a second non-compliance order, and missed the deadline to file its financial results.

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A chaotic few weeks for CannTrust Holdings had an equally chaotic effect on CannTrust shares, which tanked over 60% between July 5 and July 25. As a result of the company's initial regulatory infringement, 12,500 kilograms of dried cannabis product were placed on hold representing over 50% of CannTrust's inventory. "In the event that Health Canada orders the destruction of all or a substantial portion of the product grown in the previously unlicensed rooms, the company's results for the second quarter of 2019 would be materially adversely impacted," the company said.

While that could prove disastrous for CannTrust stock, investors in the company were hopeful that today's announcement is indicative of the company finally getting its house in order. With cannabis stocks up almost all across the board in this morning's trading, investors will be hoping that today's news is the first sign of light at the end of the tunnel for CannTrust Holdings.

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