CannTrust stock is gaining slightly on Tuesday after the company announced that it had reached a settlement with its former Danish partner Stenocare following the scandal that rocked CannTrust Holdings (TSX:TRST) (NYSE:CTST) and the cannabis market as a whole last summer.
Settlement Details
The settlement will see Stenocare receive 3.6 million Sweedish Krona, the equivalent of approximately C$500,000, with CannTrust also returning 272,727 common shares of Stenocare, relinquishing its position as one of the Danish firm's largest shareholders. The settlement formally brings an end to the relationship between the two firms after a supply contract was terminated back in September in light of the illicit cultivation scandal that wreaked havoc on CannTrust stock last summer.
After Health Canada discovered that CannTrust Holdings had been growing cannabis in unlicensed facilities last summer, it was further reported that one small batch of the illicit product had made its way to Stenocare. However, further investigation revealed that four more batches of CBD oil had been shipped to the Danish firm, of which CannTrust held a 25% stake in. After Health Canada suspended CannTrust's licenses in September, Stenocare decided to cut ties with the Canadian pot firm. CannTrust stock has fallen almost 80% since.
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Is CannTrust Stock Finally Bouncing Back?
However, today's settlement has seen CannTrust Holdings get off relatively light in terms of compensation and has brought some optimism back to investors, with CannTrust shares gaining just over 2% following the news. These gains mark a solid start to the year for the troubled pot producer after Canntrust stock received its second upgrade in as many months last week. Research firm ValuEngine upgraded its stance on the firm to a Buy, less than two months after Zacks made a similar move.
However, CannTrust stock remains a long way off of a March peak of $13.45, and it will take an extensive turnaround effort and a huge upswing in the market to return to those heady double-figure trading values. Can the impending launch of the Cannabis 2.0 market transform the fortunes of this cannabis heavyweight?
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