Nothing is going right with CannTrust Holdings (TSX:TRST) (NYSE:CTST) as today, again, CannTrust stock is down over 10% as the Ontario Securities Commission has opened an investigation into the company.
Another Setback
Cannabis producer CannTrust has been in the news for all the wrong reasons throughout July, and it seems that the negative state of affairs is going to continue. The company was ousted by cannabis regulator Health Canada last month after it was discovered that it had cultivated cannabis in five unlicensed room at the Pelham facility. Since then, the company has been in all sorts of trouble, as it had to withhold produce and recall products, and CannTrust stock fell like a stone. Then, it emerged that the company’s CEO had been aware of the illegal operation, and eventually, the company had to fire him.
While CannTrust is already being investigated over this affair, it has now emerged that the Ontario Securities Commission is also going to launch an investigation into CannTrust’s conduct. CannTrust Holdings confirmed that the investigation has been opened and it is particularly alarming that the investigation is going to be conducted by the Joint Serious Offences Team of the Enforcement Branch of the OSC.
At the time of writing, CannTrust stock has fallen by as much as 10% to $1.98. On the Canadian side, TRST stock is down 9.50% at $2.62.
The firing of CEO Peter Aceto was seen as a positive measure by some in the market as the stock jumped after the announcement. However, the bad news surrounding the company has been coming thick and fast, and CannTrust stock has been struggling because of it.
While the OSC investigation is a serious one in itself, earlier this week it emerged that the company employed the advisory services of Greenhill in order to figure out a way to manage this situation. In a statement, CannTrust Holdings said that the company is considering a range of options for resolving its issues (or at least trying to), starting from a stake sale, a merger, or, if it comes it, an outright sale. That particular piece of news might not have been welcomed by those who are possibly still holding on to the company’s stock.
Last but not least, the Health Canada investigation is also hugely important, since there is the possibility of the regulator canceling CannTrust’s license altogether.
CannTrust stock has lost about 60% so far this year, and 80% from its recent peak price of $11.
Featured image: DepositPhotos © tashatuvango
