Right after the Ontario Cannabis Store returned all unsold item to CannTrust Holdings Inc. (TSX: TRST, NYSE: CTST) final month, the Alberta Gaming, Liquor and Cannabis Commission (AGLC) has followed suit and is also returning all cannabis merchandise back to the business.
CannTrust’s item lineup was yanked from shelves soon after news broke the business had grown cannabis in unlicensed rooms from October 2018 to July 2019. These rooms had been revealed by a whistleblower, and the subsequent Well being Canada critique revealed that senior members of management had been conscious of the infraction and actively hiding rooms from regulators.
A federal critique was just concluded, which ended with CannTrust’s licenses to cultivate and sell cannabis suspended by Well being Canada.
The business will be accountable for the expense of shipping cannabis back from the AGLC, and though it will constitute one more key loss of income, the move does have the silver lining of potentially meeting the Well being Canada ruling towards returning to compliance.
CannTrust issued this statement relating to the quantity of cannabis returned and how it will effect the business:
The merchandise to be returned constitute all of the company’s merchandise presently held at the AGLC and are valued at roughly $1.three million. The AGLC operates independently of Well being Canada. Well being Canada has not ordered a recall in respect of any of the company’s merchandise. CannTrust remains completely focused on reaching total regulatory compliance.
Although CannTrust has no implies of making or promoting new cannabis and lately terminated 180 workers, the Well being Canada ruling did contain a possible path to getting these licenses re-instated if the business recalls all unlicensed item and requires substantial methods to avoid future unlicensed activity.
In spite of getting no incoming income and no potential to develop new item, CannTrust has continued to trade on each the TSX and NYSE.
The company’s stock value hasn’t bottomed out but, holding steady in the low $1 variety and presently trading at $1.28 a share as of Monday afternoon.
CannTrust notably held off on filing any current monetary reports till the Well being Canada critique was completed in the hopes the business would survive with its licenses to develop and sell intact.
If the business fails to file these quarterly reports going forward, it could be involuntarily de-listed from the NYSE in early 2020.