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(Bloomberg) – CannTrust Holdings Inc. fell an additional 13% on Friday after the Canadian pottery company halted all sales and deliveries of its products, leaving fears that it would totally lose its license.
CannTrust shares have lost 46% since the beginning of the week, revealing that Canadian regulators had assigned a non-compliant rating to its greenhouse in Pelham, Ontario. During an unannounced inspection, regulators discovered that the company was growing pot in unauthorized rooms, providing "false and misleading information" to inspectors and not keeping records properly, according to the spokeswoman. from Health Canada, Tammy Jarbeau.
The title fell to $ 3.52 C at 13:55. in Toronto and dropped for seven consecutive sessions. The impact also affected the cannabis sector as a whole, with the Horizons Marijuana Life Sciences Index ETF falling 5% to its lowest daily level since January 10th. Canopy Growth Corp. lost 8%, while Cronos Group Inc. lost 6.8% and Hexo Corp. slipped 6.1%.
CannTrust said Thursday it had voluntarily halted the sale and shipping of all its medical and leisure products, while Health Canada was reviewing its other facilities in Vaughan, Ontario. It also appointed a special board committee, composed of independent directors, to investigate the violation. CannTrust did not immediately respond to a request for comment.
"I think that a license suspension is possible," said Charles Taerk, chairman and CEO of Faircourt Asset Management, which manages the Ninepoint Alternative Health Fund. Taerk reduced its holdings of CannTrust to less than 1% of its portfolio after the company's last quarterly earnings report and sold the rest of its position on Tuesday.
"We removed CannTrust from our top 10 two months ago, not because of this problem, but because of other operational issues that were of concern to us," said Taerk during a telephone interview, citing the poor results of the company and the lack of answers from management. "Where there is smoke, there is sometimes fire, and people do not pay attention."
CannTrust's voluntary stoppage of sales and deliveries is expected to last until the end of July, "said Graeme Kreindler, an analyst at Eight Capital, who downgraded the title to resell the neutral sale and reduce its target. $ 4 to $ 4 Canadian.
"The possibility of a suspension of license remains real; However, it is very uncertain at the moment, "writes Kreindler in a note. "In the event of suspension, we believe that TRST's cash flow could support the company for approximately 12 months, since the last quarter's operating expense was $ 19 million."
Canadian law provides Health Canada with a number of means to respond to non-compliance, including "suspension or cancellation of a federal license" or the imposition of a monetary penalty. million Canadian dollars, said Jarbeau in an email.
(The split point of the updates, the sector change added in paragraph 3)
To contact the reporter about this story: Kristine Owram in Toronto at [email protected]
To contact the makers of this story: Brad Olesen at [email protected], David Scanlan, Stephen Wicary
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