CannTrust stock is coming back strongly this morning after CannTrust Holdings' (TSX:TRST) (NYSE:CTST) board fired its CEO and forced out its chairman following a regulatory breach.
A Relief Rally
Cannabis company CannTrust Holdings has been in all sorts of trouble for the majority of July after it was discovered that the company had cultivated cannabis in five unlicensed rooms in its Pelham location. The stock tanked by as much as 60% at the time, but today CTST stock recovered after it emerged that CannTrust has decided to fire its Chief Executive Officer. In addition to the CEO, the company’s president has also been fired.
CannTrust published a statement in which it said that CEO Peter Aceto was fired due to "cause," while President Eric Paul was asked by the members of the board to step down from his post.
After the news came to light, CannTrust stock started surging and climbed by as much as 17% in the early hours of trading on the New York Stock Exchange.
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The illegal cultivation issue was unearthed by Health Canada, the cannabis industry regulator in the country, and CannTrust Holdings had to withhold its produce as a result. The more damaging news, however, came out earlier this week when the Canadian media revealed that the company’s top executives knew about the whole thing.
The report stated that the CEO and the President both had knowledge of the whole affair. Although the firing of the two has sent a positive signal to the markets and investors, it is still impossible to figure out the extent of the damage that is going to affect the company due to this scandal.
CannTrust was awarded its license in April this year, but it is now going to be part of an investigation that could eventually lead to the cancellation of said license. A senior portfolio manager working with Goodried Investment Counsel stated that the company had been given the responsibility of growing cannabis safely and had violated this responsibility. He went on to say that Health Canada might take the ultimate step and cancel its license.
CannTrust stock is down a whopping 50% since the beginning of this month.
Featured image: Canva
