The CannTrust scandal threatens the still-fragile mainstream legitimacy of the cannabis sector, with insiders wondering what changed the company from strictly compliant to willing to flout regulations.
Globe and Mail, Bloomberg
- “There’s always been an amount of skepticism about the Canadian industry’s compliance [from US banks],” said lawyer Patricia Olasker. “We have always pointed out that it is a highly regulated industry, with rigorous rules, and that this should be a great source of comfort…then CannTrust happens and it really shakes people’s confidence.”
Globe and Mail
- Shares fell across the sector after the CannTrust news broke last week.
- The Globe interviewed Peter Aceto, CEO of CannTrust, who would not answer questions about what he knew about allegedly illegal activity in the company’s greenhouse.
Globe and Mail
- Bloomberg briefly interviewed Aceto, who said, “I’m human. […] The focus is on getting this business back in compliance.”
The Ontario Securities Commission’s enforcement team is reviewing a complaint that CannTrust harmed investors by not disclosing its lack of compliance. Meanwhile, the number of law firms launching class-actions climbed from 9 to 14.
- Danish company Stenocare said it had received five batches—rather than one “very small” batch—of product produced in the unlicensed grow rooms.
- Danish police are not investigating CannTrust, and the Danish Medicines Agency said their tests revealed the CannTrust cannabis was of standard quality and appears to pose no health risk.
Mackie Research Capital ended coverage of CannTrust, saying, “We have lost faith in management.”
- Some analysts worry the CannTrust scandal may slow federal legalization in the U.S.
- The scandal will likely end Health Canada’s policy allowing growers to send in photo- and video-evidence packages as part of the application for site and room licenses. “Health Canada was trying to help the industry get licensed faster,” BC Independent Cannabis Association president Courtland Sandover-Sly said, “and [CannTrust] has taken a big dump on that.”
- Health Canada revoked Agrima’s licenses, following license suspensions that began last fall. So far Health Canada has said only that Agrima—a subsidiary of Ascent—was non-compliant with regulations, widely believed to have resulted from allowing its products to be sold in illicit dispensaries.
- Bruce Linton may not have been fired from Canopy because of the losses last quarter, but rather because Constellation didn’t like his way of doing business. It didn’t help that he routinely disparaged the liquor industry.
- Bank of America Merrill Lynch downgraded Aurora from “Buy” to “Neutral,” adding, despite “focus on profit […] it is burning cash and by our estimates could be cash negative by first quarter 2020 (absent financing).”
- MYM Neutraceuticals’ $200M production facility in Weedon, QC, appears to be abandoned due to lack of Health Canada permits.
La Presse—In French