After ceasing all sales while awaiting a Health Canada review over unlicensed growing that took place in the company’s Pelham greenhouse, CannTrust Holdings (TSX: TRST; NYSE: CTST) initiated a voluntary internal cease trade policy.
That informal policy has now been made official by the Ontario Securities Commission with the receipt of a Management Cease Trade Order, which was filed as CannTrust missed the August 14 date for quarterly financial reporting.
While it doesn’t affect most external shareholders, with the Cease Trade Order in place no executive officers or directors of CannTrust are allowed to trade securities until two days after quarterly reports are filed.
That filing was delayed as the company waits on Health Canada’s decisions pending the review completion, which may include orders to destroy a significant portion of organic assets or even a total loss of CannTrust’s license.
After firing CEO Peter Aceto and then forming a special committee to investigate the unlicensed growing, CannTrust issued this statement:
In a latest financial update to shareholders, CannTrust estimated that more than half of the company’s current inventory could impacted by a potential Health Canada decision, representing in excess of $50 million in assets.
That uncertainty over whether product will be destroyed or the company’s license entirely revoked is causing additional problems for CannTrust on the U.S. side with the New York Stock Exchange (NYSE).
Now out of compliance with financial reporting on that exchange, the NYSE has announced that if CannTrust fails to file the proper reports within six months the company may be entirely de-listed from the exchange.
In addition to losing out on exclusive business deals that have since been nixed, CannTrust’s financial woes are likely just beginning if it survives the Health Canada review.
Class action lawsuits have already been launched for investors who acquired shares in CannTrust from the point unlicensed growing began in October of 2018 through early July of 2019 when it was revealed to the public.