Marijuana firm CannTrust faces probe by Ontario regulators, police

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Cannabis cultivator CannTrust Holdings disclosed the company is under investigation by securities regulators and the police, the latest blow to hit the embattled Ontario firm.

The company said in a news release that the Ontario Securities Commission (OSC) has opened an investigation “into matters and parties related to CannTrust.”

The agency assigned the case to its Joint Serious Offenses Team (JSOT) of the Enforcement Branch. 

The JSOT consists of the OSC, the Royal Canadian Mounted Police Financial Crime program and the Ontario Provincial Police Anti-Rackets Branch.

In the release, CannTrust said it will likely miss an Aug. 14 deadline to file its interim financial results for the three- and six-month periods ended June 30.

In addition, the company said it imposed a blackout on trading of the company’s stock among directors, officers and other CannTrust insiders.

It plans to continue the blackout until it files its second-quarter results along with any restated financial data, if required.

The latest developments come on the heels of CannTrust hiring a financial adviser to review “strategic alternatives,” including a possible sale of the company.

Earlier, CannTrust fired its CEO and forced the resignation of its chair over a scandal involving unlicensed marijuana cultivation.

In announcing the expected delay in its financial results, CannTrust cited pending Health Canada decisions regarding the valuation of the company’s inventory as well as its “biological assets” and revenue recognition.

CannTrust’s stock (NYSE: CTST) has been in a tailspin since a whistleblower alerted the federal cannabis regulator to five unlicensed cultivation rooms the company had been operating since late 2018.

More information is available here and here.