Wish there was a way to trace seeds and plants...
CannTrust Falls on Black-Market Seeds Report; Offsets Cost Cuts
2019-09-06 13:42:34.124 GMT
By Sandrine Rastello
(Bloomberg) -- CannTrust Holdings Inc.’s stock recovery was
short lived.
Shares of the troubled pot company fell 5.3% to C$2.20 in
Toronto on Friday after BNN Bloomberg reported that staff
brought black-market cannabis seeds into a production room last
year, leading to some illicitly-grown pot flowing into the legal
market.
That followed a rally on Thursday, and news after the
market closed, that the company was cutting 20% of its
workforce, or about 180 people. That is expected to produce
annual cash savings of about C$9 million ($6.8 million),
according to the company.
The stock has lost two thirds of its value since early
July, when it revealed it had broken Canadian regulations by
growing cannabis in unlicensed areas of its greenhouse in
Pelham, Ontario, potentially putting its license at risk.
Negative headlines have piled up since. Chief Executive
Officer Peter Aceto was fired and Chairman Eric Paul resigned; a
joint task force of securities regulators and police is
investigating the company for potential “serious violations of
the law”; auditor KPMG LLP withdrew its reports on the company’s
year-end and first-quarter results; regulators found further
breaches at a second facility in Vaughan, Ontario; and Ontario’s
cannabis wholesaler is returning C$2.9 million ($2.2 billion)
worth of products at the company’s expense.
More than 1,000 plants originated from elicit seeds were
grown at CannTrust’s facility in Pelham, according to the BNN
Bloomberg report, which cited internal company documents and
unnamed sources. It’s unclear how many were processed for sale
in the legal market, but plants from at least two strains did,
it said.
A representative for CannTrust didn’t immediately respond
to an email seeking comment.
“To the best of our knowledge, no product using seeds from
unauthorized external sources was introduced into the market,”
CannTrust spokeswoman Jane Shapiro told BNN Bloomberg in an
emailed statement.
CannTrust shares are now trading below the company’s
listing price of C$2.50 and analysts expect it to be deleted
from the S&P/TSX Composite Index as soon as next week when a
quarterly review of takes place.
