CannTrust Holdings Inc.’s (TRST.TO) special committee reiterated its vow to take “appropriate actions” after a bombshell report from The Globe and Mail alleged top executives at the Vaughan, Ont.-based pot firm were informed in November that cannabis was cultivated in unlicensed rooms.
“The Independent Special Committee of the Board of Directors of CannTrust is in the final stages of a thorough investigation of these matters as part of our due diligence requirements,” said Robert Marcovitch, chairman of CannTrust’s special committee investigating the situation around the company running afoul of certain Health Canada regulations, in an emailed statement to BNN Bloomberg.
“We expect to conclude this investigation within days and will take all appropriate actions immediately thereafter.”
CannTrust announced July 11 it was suspending all sales and shipments of its products following a Health Canada inspection that discovered thousands of kilograms of cannabis were grown over a six-month period in unlicensed rooms at its Pelham, Ont. greenhouse facility. Earlier this week, CannTrust confirmed it filed a response to Health Canada on July 17 and that the company will take “appropriate actions” to address its compliance culture and restore trust.
On Tuesday, The Globe published a report alleging that CannTrust Chairman Eric Paul and the company’s CEO, Peter Aceto, were made aware in November that cannabis was being cultivated in unlicensed rooms – seven months before Health Canada uncovered the regulatory breach.
According to a Nov. 16, 2018 email cited by The Globe, CannTrust’s director of quality and compliance Graham Lee allegedly informed Aceto and other top executives about a Health Canada inspection that just happened and said “we dodged some bullets.”
Paul and Aceto did not immediately respond to BNN Bloomberg’s request for comment.
The mounting controversy at the company comes as some investors remain cautious on the nascent cannabis sector amid sky-high valuations.
“This is still the wild west phase of this whole cycle,” Bill Harris, partner and portfolio manager at Avenue Investment Management, told BNN Bloomberg Wednesday.
“It will take years for it all to settle down. Everybody just tried to get their businesses off the ground as fast as they possibly could. None of the businesses so far make sense to us as direct investments – mostly because of valuation. We’re standing back.”
Cannabis Canada is BNN Bloomberg’s in-depth series exploring the stunning formation of the entirely new – and controversial – Canadian recreational marijuana industry. Read more from the special series here and subscribe to our Cannabis Canada newsletter to have the latest marijuana news delivered directly to your inbox every day.