On Monday (August 12), shares of CannTrust Holdings (NYSE:CTST,TSX:TRST) dropped dramatically after regulators found the company has been operating a second non-compliant facility.
The company first made headlines for non-compliance last month, when Health Canada uncovered an unlicensed CannTrust growing operation in Pelham, Ontario. Now the federal agency has revealed that CannTrust’s manufacturing facility in Vaughan, Ontario, is also non-compliant.
According to the cannabis firm’s press release, the Health Canada inspection that led to the second non-compliant rating was done in mid-July.
The probe found that the following actions were done without approval from Health Canada: five rooms in the facility had been changed to storage areas since June, two areas in the facility had been constructed and one had been used for storage since November.
Additionally, the entire facility failed to meet the standards for operating procedures, lacked adequate security controls and operated with a poor quality of assurance investigations and controls. The team also didn’t file the documents needed for an audit in an appropriate timetable.
After seeing a late surge last Friday (August 9), CannTrust investors are once again seeing the value of the company drop after the confirmation of non-compliance.
CannTrust opened in New York and Toronto, respectively, at US$2.25 and C$2.98 on Monday.
As of 12:12 p.m. EDT that day, the company had seen a decline in value of 24.92 percent in New York and 24.7 percent in Toronto.
Last Friday, shares of CannTrust mysteriously surged by 40 percent with less than 20 minutes left on the trading session to close the week. MarketWatch reported that a block trade done at about 3:30 p.m. EDT may have launched the run up.
The newly instated interim CEO for CannTrust, Robert Marcovitch, who is the former president and CEO of K2 Sports, said the company has retained the services of independent consultants to fix the problems highlighted by the regulators.
“We are looking at the root causes of these issues and will take whatever remedial steps are necessary to bring the company into full regulatory compliance as quickly as possible,” Marcovitch said.
As mentioned, the CannTrust scandal started in July when regulators signaled improper growing done by the company at its Pelham, Ontario, facility. A hold was placed on 5,200 kilograms of dried cannabis, alongside a voluntary hold on 7,500 kilograms of dried product from the company.
CannTrust elected to halt operations, including sales to medical patients, but unlicensed product had already reached provincial and international distributors.
Eric Paul, co-founder, former CEO and active chair of the board, was asked to resign from the company at the end of July as CannTrust completed an internal investigation. Marcovitch was given the role of CEO following the firing of former CEO Peter Aceto as part of the review.
Ultimately, a sale of assets may be on the horizon for CannTrust; the company announced on August 1 that it has secured Greenhill & Co. Canada as a financial advisor to consult in strategic alternatives.
As CannTrust confronts the new image it has gained in the marijuana market — from a leader on senior exchanges in Canada and the US to a much-maligned company operating beyond the regulations for licensed producers — its share price has suffered. As a result, the firm will face an investigation from securities regulators.
In an update about a projected delay in the filing of its financial reports due on Wednesday (August 14), the company was forced to inform investors that the Ontario Securities Commission (OSC) has begun an official review of the company.
“Today, staff of the OSC advised the Special Committee’s legal counsel that an investigation has been opened into matters and parties related to CannTrust and the investigation has been assigned to the Joint Serious Offences Team of the Enforcement Branch of the OSC,” the Canadian firm told investors.
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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.
CanBud Distribution Corporation Closes 2M Second and Final Tranche of its Oversubscribed Private Placement Offering
CanBud Distribution Corporation (CSE: CBDX) (FSE: CD0) (“CanBud” or the “Corporation”) is pleased to announce that it has closed the final tranche of its oversubscribed non-brokered private placement for aggregate gross proceeds of approximately $4,730,000 (the “Offering”).
The Corporation issued a combined total of 39,409,346 units (each a “Unit“) at price of $0.12 per Unit, with each Unit comprised of one common share in the capital of the Corporation (each a “Common Share“) and one common share purchase warrant (each a “Warrant“). Each Warrant entitles the holder to purchase one additional Common Share at an exercise price of $0.22 within 24 months of the closing of the Offering (the “Warrant Term“), provided, however that if the closing price of the Common Shares on the Canadian Securities Exchange (the “CSE“) (or any such other stock exchange in Canada as the Common Shares may trade at the applicable time) is $0.25 or greater per Common Share for a period of five (5) consecutive trading days at any time after the closing date of the Offering, the Corporation may accelerate the Warrant Term such that the Warrants shall expire on the date which is 30 days following the date a press release is issued by the Corporation announcing the reduced warrant terms.
Thoughtful Brands Inc. (CSE:TBI)(FSE:1WZ1)(OTCQB:PEMTF) (the “Company” or “Thoughtful Brands) announces that the letter of intent with Franchise Cannabis Corp. (“FCC”), previously announced in January, has been terminated. The previously announced European joint venture with FCC will continue and allow the Company to launch and tailor its products to European consumer demands
In connection with termination of the merger transaction with FCC, the Company has agreed to pay FCC $100,000 in cash and to issue FCC 5,000,000 common shares of the Company at a deemed value of $0.05 per share. The common shares will be subject to a four-month-and-one-day statutory hold period in accordance with applicable securities laws.
Mergers and acquisitions (M&A) in cannabis space have helped boost the industry to new levels.
Strategic sale of non-core assets by Lobe adds non-dilutive capital and shareholder value
Lobe Sciences Ltd. (CSE: LOBE) (OTC Pink: GTSIF) (“Lobe” or the “Company”) is pleased to announce, further to its press release dated February 23, 2021, that it has completed the sale to Ionic Brands Corp. (“Ionic Brands”) of Lobe’s non-core cannabis assets relating to Washington-based Cowlitz County Cannabis Cultivation Inc. (“Cowlitz”) held by Lobe’s subsidiary vendor, Green Star Biosciences Inc. (the “Transaction”).
Seattle Area Grocery Chain Metropolitan Market to Begin Carrying KOIOS and Fit Soda on March 22, 2021
Adding to its existing presence on the west coast of the United States, all five KOIOS™ flavours and all four Fit Soda™ flavours will be carried in Metropolitan Market stores beginning on Monday, March 22, 2021. Serving the Seattle-Tacoma area (population 3.87 million), Metropolitan Market is one of five chains under its parent firm Good Food Holdings, which has a total of 51 stores in California, Oregon, and Washington State.
Koios Beverage Corp. (CSE: KBEV; OTC: KBEVF) (the “Company” or “Koios”) is pleased to announce that beginning on Monday, March 22, 2021, Koios’ entire line of canned beverage products will be sold at all locations of Metropolitan Market, an urban format supermarket chain in the Seattle-Tacoma area of Washington State. In Q1 2021, the Company announced multiple placements of its beverage products with regional grocers in markets on the west coast of the United States including Market of Choice in Oregon Jensen’s in Southern California and major natural grocery chain Sprouts Farmers Market which has a substantial west coast presence with over one third of its locations (360+ stores across 23 states) in California as well as Washington State 1 . The Company has also recently announced other developments relating to its expansion efforts being undertaken in 2021 such as an in-house beverage canning facility and distribution agreements with regional and national wholesale partners.