The heads have finally started to roll over unlicensed cannabis growing that took place in five rooms at a CannTrust Holdings (TSX: TRST; NYSE: CTST) facility located in Pelham.
Today the company announced the immediate termination of Chief Executive Officer Peter Aceto as well as the resignation of board chairman Eric Paul.
The drastic move of firing a sitting CEO for cause wasn’t unexpected, as news began circulating among cannabis publications on Wednesday that emails from Aceto showed he was aware of the illegal grow rooms.
Those two major senior management changes arrived at the prompting of a special committee formed last week to perform an internal investigation into unlicensed growing that occurred from October 2018 through early March.
The chairman of that special committee — Robert Marcovitch — will leave the committee and step into the position of interim Chief Executive Officer effective immediately.
Accountant Mark Dawber will move up to chair the special committee as the investigation continues independent of the ongoing federal Health Canada review.
Discussing the shifts in the committee and company upper management, new CannTrust Chief Executive Officer Marcovitch had this to say:
Marcovitch has previously served as Chief Executive Officer for Ride Inc., K2 Sports, and The Coleman Outdoor Company.
In addition to ousting the CEO and board chairman, CannTrust recently halted all sales operations while Health Canada conducts a review, and also cancelled an exclusivity deal with Kindred Partners Inc.
It remains to be seen if those voluntary measures will prevent Health Canada from revoking the company’s grow license, which would effectively shut down the company, although they have had a clear impact on investor confidence.
After plummeting to a low of $1.95 yesterday, CannTrust stock has rebounded to $2.33 when news of the CEO departure broke. That price still remains significantly lower than the six month high of $10.04 that CannTrust saw at the end of March before the unlicensed growing was discovered.
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