Bad news and leadership shakeups are typically bad for investors. But for CannTrust Holdings, reports of illegal growing activity were quickly followed by a surge in stock price.
CannTrust stock value rose as much as 23 percent after the company fired its chief executive officer and forced the resignation of its president after reports surfaced about unlicensed grow operations. CannTrust’s board of directors has appointed Robert Marcovitch as interim CEO.
CannTrust has said it will cooperate with an investigation from Health Canada.
“Our first priority is to complete the remaining items of our investigation and bring the company’s operations into full regulatory compliance,” Marcovitch said in a statement. “Implementing the necessary changes is essential to the interests of our medical patients, customers, shareholders, and employees.”
According to a press release by CannTrust, Health Canada has put a hold on 5,200 kg of the company’s dried cannabis. In a statement, CannTrust stressed they would avoid unlicensed growing activities in the future.
“Our team has focused on building a culture of transparency, trust, and excellence in every aspect of our business, including our interactions with the regulator,” CannTrust said in a statement. “We have made many changes to make this right with Health Canada. We made errors in judgment, but the lessons we have learned here will serve us well moving forward.”
In the press release, CannTrust outlined its strategy for making sure they are compliant with Canadian growing regulations in the future. According to the release, CannTrust “has implemented a number of corrective actions” including:
- Further comprehensive employee training
- Retained external advisors for an independent review of compliance processes
- Comprehensive review and update of processes and procedures
- Voluntarily advised Health Canada of issues that may impact compliance at its Vaughan facility regarding product storage
Although CannTrust stock prices surged after news broke of their leadership restructuring, the company’s stock prices have dropped by about 50 percent over the course of the past year.