Cannabis stocks were mixed on Monday, with CannTrust falling another 5% on news a customer is returning almost three million Canadian dollars worth of its weed and MedMen rallying as it launches delivery service across California.
CannTrust CTST, 0.00% TRST, 0.94% said it has received notice that the Ontario Cannabis Store is returning about C$2.9 million of its cannabis because it is “non-conforming” under the master agreement between the two companies. The OCS is the Crown corporation in charge of wholesale cannabis distribution to licensed cannabis retailers in the province, and operator of Ontario’s biggest online recreational cannabis store.
The company did not offer any further details and a request for clarification of the term ‘non-conforming’ was not immediately returned. But the move is the latest blow to CannTrust, which has seen its stock fall more than 65% in three months after the regulator discovered it was growing cannabis in unlicensed rooms at an Ontario facility. The company has since fired its CEO and pushed out its president after local media found email traffic showing they were aware of the unlicensed grow, some of which was exported to Denmark in a breach of Canada’s drug laws.
KPMG has pulled its audit for 2018 and the first quarter of 2019 and Health Canada has identified problems at another facility. The company is considering its options, which include a possible sale.
MedMen shares MMNFF, -2.96% rose 5.2%, after it announced the launch of statewide delivery in California, the biggest recreational market in the nation. The company currently has 17 retail outlets in the Golden State.
Aurora Cannabis shares ACB, 1.02% ACB, 1.55% were down 1.3%, after the company said it has completed the acquisition of Hempco Food and Fibre Inc. for $63.4 million ($47.7 million). The company will now become part of Aurora’s Aurora Hemp business unit, which it will use to develop CBD-from-hemp products.
Sundial Growers SNDL, 1.16% shares rose 0.6%. The company, which went public on Aug. 1, sold a half ton of cannabis that was returned by corporate buyer Zenabis Global ZBISF, 6.21% ZENA, 7.69% because it contained visible mold, parts of rubber gloves and other non-cannabis material, according to people familiar with the matter, as MarketWatch’s Max A. Cherney reported on Friday.
On Monday, Sundial said in a regulatory filing that it was “aware” of an online article involving a commercial relationship with another licensed producer, but that the article contained “factual inaccuracies.” It did not offer any further details, apart from to say “this isolated immaterial matter” is being resolved.
“There is no impact on Q2 financial reporting and we anticipate that the impact on Q3 earnings will be negligible,” said the filing.
Elsewhere in the sector, marker leader Canopy Growth CGC, 3.51% WEED, 3.79% was down 3.9%, Cronos CRON, 1.32% CRON, 1.80% was down 1.6%, OrganiGram Holdings’s stock OGI, -0.88% was down 2.1%. and Aphria APHA, 1.05% APHA, 2.05% was up 0.6%. Tilray TLRY, 3.53% was down 1.4%.
The Horizons Marijuana Life Sciences ETF HMMJ, 1.63% was down 0.4%, with 26 of its 54 member stocks declining. The ETFMG Alternative Harvest ETF MJ, 0.56% was down 0.3%, with 24 of its 36 members falling.