Over the past months, CannTrust stock has been underperforming as Canadian cannabis firm CannTrust Holdings (TSX:TRST) (NYSE:CTST) has been in all sorts of trouble after it was discovered that the company had cultivated cannabis in unlicensed rooms.
The company’s cultivation licenses were suspended by Health Canada, and later, the company’s CEO was dismissed after it emerged that he had been aware of the illegal cultivation. However, a vital moment is now approaching that could have a profound effect on CannTrust's future.
When Health Canada suspended CannTrust's license, it provided the company with a list of things that needed to be accomplished before its license could be reinstated.
With a suspended license, obviously, CannTrust Holdings has not been able to generate any revenue, and the whole debacle has put quite a strain on CannTrust stock. However, CannTrust investors finally got the news that they had been anticipating on February 14. The company announced that it is going to submit the appropriate documents to Health Canada for the reinstatement of its cultivation licenses.
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CannTrust stock recovered somewhat after the news was announced; however, it should be kept in mind that there is no guarantee that CannTrust will have its license returned at this time. The company did not mention any timeline, and in addition to that, Health Canada is not known for being particularly quick with license reinstatements.
In other words, CannTrust is going to be squarely at the mercy of Health Canada from now on in. The company announced that the documents were ready to be submitted on February 14.
While there is a lot of uncertainty about the reinstatement, it should be noted that the company has not lost a lot of ground due to the cancelation of its license. It still has CA$167 million in cash and boasts substantial production capabilities. In order words, if the license is reinstated, then CannTrust Holdings could be in the swing of things straight away, and CannTrust stock could soar as a result.
What do you think?
Featured image: Canva
