CTST stock is moving lower this morning as CannTrust Holdings (TSX:TRST) (NYSE:CTST) has reduced 180 positions or 20% of its workforce to save as much as $9 million per year.
While it is true that the cannabis industry at large has been in the middle of a bit of a downturn over the past few months, the situation with CannTrust Holdings is a bit different. The company has found itself in the middle of a meltdown ever since Health Canada found that it had been growing marijuana in five unlicensed rooms at its Pelham facility. Since then, the company has lurched from one problem to the next and has been in immense trouble as its business was effectively halted. The company is currently being investigated by Health Canada for its repeated transgressions.
Today, it has emerged that the company has decided to lay off as many as 180 employees.
The layoffs constitute as much as 20% of the total workforce of the company, and the move is apparently going to save the company a total of $9 million in cash yearly. According to reports, the laid-off employees worked either in customer service or in the production process.
CTST stock is now down 4% at $1.69.
Robert Marcovitich, who is serving as the Chief Executive Officer of the company after the previous CEO had to step down for having knowledge of the illegal cultivation, stated that the move reflected the current needs of the business.
CannTrust Stock is Down 85% Since April
The weight of these problems has eroded the value of CannTrust stock tremendously since July, and since its record highs back in April, CTST stock has nosedived by as much as 85%. The current problems facing CannTrust Holdings are such that brokerages are not yet confident enough to recommend the stock. In this regard, it needs to be remembered that in the past, such scandals have happened in the cannabis industry, and many companies have been able to make strong comebacks after having negotiated the tough period.
The company boasts of $224.5 million in assets and merely $34.4 million in total liabilities. In such a situation, CannTrust should be an attractive proposition, but the Health Canada problem seems to have spooked investors.
That being said, it remains to be seen if the company is bought out privately by any entity at any point, and if that happens, then CTST stock price could rise.
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