After a devastating few weeks that have seen the company’s stock drop significantly, CannTrust Holdings Inc. (TSX: TRST; NYSE: CTST) is ramping up efforts to cut costs.
Back in October of 2018, CannTrust struck a deal with Kindred Partners Inc. to launch a sales team representing cannabis products to the adult use recreational market in Canada.
Today the company announced it has waived the exclusivity provision of that previously announced agreement.
Kindred is a subsidiary of Breakthru Beverage Group, which notably had purchased just north of 900,000 shares of CannTrust last year at a price of $10.23 per share.
Following the news of the exclusivity portion of the deal getting axed, CannTrust shares were up slightly this morning to a price of $2.73.
That huge drop from the $10+ high just six months ago occurred in light of news that the company had violated Health Canada licensing rules and was growing cannabis in unlicensed rooms.
The stock had already been tumbling after the latest quarterly earnings showed a major revenue projection miss, as well as a multi-million net loss. Those lower than expected numbers were further complicated when the company announced it would significantly miss initial outdoor grow projections.
CannTrust has additionally ceased all sales operations while a review from Health Canada is underway, which is likely to cause an even larger revenue hit if the company survives the review process with its licensing intact.
A special committee was formed earlier this month for an internal investigation into the non-compliance complaint, which is being headed up by chairman Robert Marcovitch. Discussing the committee’s activity so far, Marcovitch commented:
The committee additionally includes Shawna Page, Mark Dawber, FCPA, and John Kaden, Esq.
Together with the chairman, those members of the committee have been meeting with the company’s legal counsel and are expected to offer specific recommendations to the CannTrust board on actions to be taken following the unlicensed growing.