After the company’s sales and cultivation licenses were suspended by Health Canada, CannTrust Holdings Inc. (TSX: TRST; NYSE: CTST) is preparing to destroy $77 million worth of assets and inventory in an attempt to return to regulatory compliance.
That material includes the $1.3 million in cannabis returned from the Alberta Gaming, Liquor and Cannabis Commission last month, as well as the $2.9 million worth of product returned by the Ontario Cannabis Store.
Following the destruction of that unlicensed inventory, CannTrust will then submit a remediation plan to Health Canada on Oct. 21 outlining specific measures aimed at preventing unlicensed growing in the future and maintaining compliance through improved record keeping.
Interim CEO Robert Marcovitch, who is serving in the role after the forced ouster of former Chief Executive Officer Peter Aceto, issued this statement regarding the company’s future in the industry:
It currently remains unclear if the license suspensions will be lifted by Health Canada in the future, leaving the company and its stock holders in limbo until CannTrust either runs out of funds or is able to resume growing and selling again.
The company officially ceased all sales in mid-July after Health Canada announced an audit following the discovery of hidden unlicensed grow rooms at a Vaughan, Ontario facility. That discovery led to the firing of Peter Aceto and the forced resignation of board chairman Eric Paul.
A special committee was additionally formed after those major upper management changes to identify remediation measures to be enacted as CannTrust seeks to return to federal regulatory compliance and resume operations.
Although the company is effectively unable to conduct any kind of business and laid off most of its work force in early September, the stock price hasn’t bottomed out and has remained steady in the mid $1 range, currently trading at $1.28 a share this morning.