After the Ontario Cannabis Store returned all unsold product to CannTrust Holdings Inc. (TSX: TRST, NYSE: CTST) last month, the Alberta Gaming, Liquor and Cannabis Commission (AGLC) has followed suit and is also returning all cannabis products back to the company.
CannTrust’s product lineup was yanked from shelves after news broke the company had grown cannabis in unlicensed rooms from October 2018 to July 2019. Those rooms were revealed by a whistleblower, and the subsequent Health Canada review revealed that senior members of management were aware of the infraction and actively hiding rooms from regulators.
A federal review was just concluded, which ended with CannTrust’s licenses to cultivate and sell cannabis suspended by Health Canada.
The company will be responsible for the cost of shipping cannabis back from the AGLC, and while it will constitute another major loss of revenue, the move does have the silver lining of potentially meeting the Health Canada ruling towards returning to compliance.
CannTrust issued this statement regarding the amount of cannabis returned and how it will impact the company:
Although CannTrust has no means of producing or selling new cannabis and recently terminated 180 employees, the Health Canada ruling did include a potential path to having those licenses re-instated if the company recalls all unlicensed product and takes substantial steps to prevent future unlicensed activity.
Despite having no incoming revenue and no ability to grow new product, CannTrust has continued to trade on both the TSX and NYSE.
The company’s stock price hasn’t bottomed out yet, holding steady in the low $1 range and currently trading at $1.28 a share as of Monday afternoon.
CannTrust notably held off on filing any recent financial reports until the Health Canada review was completed in the hopes the company would survive with its licenses to grow and sell intact.
If the company fails to file those quarterly reports going forward, it may be involuntarily de-listed from the NYSE in early 2020.
The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Grizzle hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.