The apocalyptic moment CannTrust Holdings Inc. (TSX: TRST, NYSE: CTST) shareholders and employees have been waiting for is finally here – the company just announced its license has been suspended by Health Canada.
After more than two months of waiting, the decision was handed down today for a partial cultivation suspension and a complete processing, sales, and research suspension, effectively preventing the company from operating.
The suspensions arrive after a Health Canada audio back in July discovered CannTrust was growing cannabis in unlicensed rooms that had been purposefully concealed from regulators.
Existing plant batches that were previously propagated can still be harvested and dried, but that product cannot legally be sold and no new plants can be propagated going forward while the two suspensions remain in effect.
Bracing for the expected decision and attempting to trim costs, the company terminated 180 employees earlier this month.
While the suspensions make it unlikely CannTrust will be able to operate as a cannabis producer anytime in the near future, there is still a potential light at the end of the tunnel, with the company issuing this statement today:
In particular, it is possible for the suspensions to be lifted if measures are taken to improve inventory tracking to prevent unlicensed growing, unlicensed product is recalled and destroyed, and efforts are made to ensure production and distribution only takes place through licensed channels.
The likelihood of that possibility remains unclear, as CannTrust had already taken substantial steps in that direction prior to the Health Canada decision. After the unlicensed growing was revealed, the company fired CEO Peter Aceto, forced the resignation of board chair Eric Paul, and had all unsold product returned from the Ontario Cannabis Store.
Although CannTrust voluntarily ceased sales in mid-July and subsequently issued a management cease-trade order, the company’s stock continued to trade for non-insiders in the intervening time. The price has steadily declined to its current position of $1.30 a share today – less than 10% of its trading price back in April.