At the halfway point of 2019, investors were met with major changes in the cannabis industry.


The marijuana market has faced challenges this past month as two established companies underwent transition periods, including a chaotic discovery and the end of an era for an industry leader.

During the month of July, cannabis investors were tested as storming developments from cannabis producers CannTrust Holdings (NYSE:CTST,TSX:TRST) and Canopy Growth (NYSE:CGC,TSX:WEED) affected the performance of the sector.

CannTrust faces scandal

Canadian cannabis producer CannTrust Holdings suffered a massive drop off after it was revealed the firm had hosted illicit growing operations in unlicensed rooms at its Pelham, Ontario facility.

Thanks to the actions of a whistleblower — former CannTrust employee Nick Lalonde — Health Canada, the regulatory agency tasked with overseeing licenses, confirmed the improper growing. CannTrust was forced to place a hold on its product, although reports then showed provincial and international partners had already received the unlicensed product.

Besides the initial chaos from the scandal, which led the shares of the company to plummet, the market soured further on CannTrust after a Globe and Mail report found internal emails showing high-ranking executives were aware of the unlicensed growing rooms.

After completing an internal review, a special committee fired CEO Peter Aceto and asked Paul Trust, co-founder, former CEO and active chairman of the board, to resign from the firm.

CannTrust ended the month by announcing it has secured the services of Greenhill & Co. Canada as a financial advisor to determine strategic alternatives for the company and its assets.

Canopy Growth fires co-founder and CEO

Canopy Growth, one of the leading marijuana companies, announced the dismissal of Bruce Linton as co-CEO of the company in July.

Linton has become a dominant voice on the direction of the marijuana industry. In his time at the company, he oversaw Canopy Growth’s rise to become a global company with a New York Stock Exchange listing and a valuation of over C$15 billion. Fellow Co-CEO Mark Zekulin has taken over full responsibilities at the helm of the company while its board of directors moves forward with a search for the next leading executive.

“I personally remain committed to a successful transition over the coming year as we begin a process to identify new leadership that will drive our collective vision forward,” Zekulin said in a statement.

Linton came under heavy scrutiny after dismal losses from his company as part of its most recent quarter and fiscal year. During a conference call with investors, Bill Newlands, CEO of alcohol maker and Canopy Growth investor Constellation Brands (NYSE:STZ), acknowledged that his company wasn’t too enthused with the recent financials from the marijuana firm.

“While we remain happy with our investment in the cannabis space and its long-term potential, we were not pleased with Canopy’s recent reported year-end results,” Newlands said.

Watch the video above for more on what happened in cannabis during the month of July.

Don’t forget to follow us @INN_Cannabis for real-time news updates!

Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.

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