Canntrust managers cease trade while company works out regulatory problems with Health Canada
Cannabis producer sought the order as sign of good faith to investors and OSC approved
CannTrust Holdings Inc. says the Ontario Securities Commission has approved a management cease trade order as the cannabis producer works to deal with its regulatory problems with Health Canada.
The order by the securities regulator prohibits the directors and executive officers of the company from trading in CannTrust securities until two full business days after it makes all of its required filings.
The company sought the order earlier this month in anticipation of missing an Aug. 14 deadline to file an interim financial report for the three and six month periods ended June 30.
CannTrust says the filings will depend, in large measure, upon the timing and impact of Health Canada's decisions regarding the company's non-compliance with regulatory requirements.
"Although the special committee is directing the company to work closely with Health Canada to remediate the root causes of any non-compliance identified by Health Canada, to date the company has not had any substantive discussions with Health Canada concerning remediation matters," CannTrust said in a statement.
The problems at CannTrust began after it revealed that Health Canada had found problems at the company's greenhouse in Pelham, Ont., and were compounded later by issues raised by the regulator at its manufacturing facility in Vaughan, Ont.
The scandal has resulted in the ousting of the company's chief executive and the chairman of its board of directors.
The company's auditor has also withdrawn its endorsement CannTrust's 2018 financial statements.
Hold on inventory
CannTrust said it is working with the regulator to prepare a remediation plan for submission, but it is unable to provide any guidance as to when the problems will be resolved.
The regulator has placed a hold on inventory including approximately 5,200 kg of dried cannabis that was harvested in the previously unlicensed rooms in Pelham, until it deems that the Company is compliant with regulations.
The company has also instituted a voluntary hold of approximately 7,500 kg of dried cannabis equivalent at its Vaughan facility.
CannTrust noted that Health Canada has broad discretion in the exercise of its regulatory powers.
"In the event that Health Canada orders the destruction of all or a substantial portion of the product grown in the previously unlicensed rooms, the company's results for the second quarter of 2019 would be materially adversely impacted," the company said.