July 24, 2019 / 3:45 PM / 3 months ago

BUZZ-CannTrust slumps on report that chairman, CEO were informed of violation

(Adds analyst comment, updates shares)

** Canada’s CannTrust Holdings Inc down 21.3% at C$2.70 after report that chairman, CEO were informed in Nov. of unlicensed cannabis growing

** Chairman Eric Paul and CEO Peter Aceto were made aware that cannabis was being cultivated in rooms at a growing facility in Southern Ontario that had yet to be licensed by the federal regulator - The Globe and Mail reported here

** With the new development, we see wholesale executive changes necessary at the very least if Health Canada are to uphold the co’s license following suspension - Jefferies

** Strong likelihood of fine by Health Canada for breach of the Cannabis Act, possibility of jail time for those involved, action from SEC and possibility of de-listing from NYSE - Jefferies

** On July 8, Health Canada found the weed producer grew cannabis in unlicensed rooms and then restricted the company from clearing its inventory

** CannTrust suspends sales of cannabis products amid its products being put on hold by Alberta and Ontario’s cannabis distributor pulling co’s products from its site

** Including Wednesday’s losses, TRST down ~58% since July 8 (Reporting By Arundhati Sarkar and Shanti S Nair in Bengaluru)

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