Catching up on the latest CannTrust developments

Marijuana plants grow in a greenhouse at the CannTrust cannabis production facility in Fenwick, Ont. (Bloomberg photo by Galit Rodan)

Marijuana plants grow in a greenhouse at the CannTrust cannabis production facility in Fenwick, Ont. (Bloomberg photo by Galit Rodan)

A lot has happened since the CannTrust unlicensed growing scandal broke earlier this month. Here's a recap.

Within days of the July 8 revelation that CannTrust was growing cannabis in unlicensed parts of its Pelham, Ont. greenhouse facility, the company stopped selling and shipping all cannabis products. By then, though, more damaging information had been revealed. 

The Globe and Mail interviewed ex-CannTrust employee Nick Lalonde, and on July 10 published details of exactly how CannTrust allegedly grew plants in unlicensed rooms: by hiding them behind fake walls to keep them out of photographs being sent to Health Canada. CannTrust submitted its formal response about the situation to Health Canada on July 17, and named a special committee to investigate internally, but continued to stay silent on the question of whether or not top brass knew about the illegal growing.

That question was answered by media reports published July 23 and July 24. First, another Globe and Mail report cited internal CannTrust emails from November, 2018 that showed CannTrust CEO Peter Aceto and chairman Eric Paul were in the know about the unlicensed rooms. According to internal CannTrust documents obtained by BNN Bloomberg, Aceto told a subordinate to "continue as planned" with production in an unlicensed grow room.

Then, the Financial Post reported that a promotional video shot in early 2019, which was posted on YouTube, actually shows Aceto himself standing in front of one of the unlicensed rooms

After those stories, CannTrust's board of directors took decisive action.

On July 25, the company announced it had fired Aceto and demanded Paul's resignation. Robert Marcovitch, the former CEO of ski-maker K2 Sports and the original chair of CannTrust's special internal investigatory committee, is serving as interim CEO. (Another board member took over the committee.)

But the bad press keeps coming for CannTrust.

This past Monday, The Globe and Mail reported that former board chair Eric Paul and another company director, Paul Litwin, sold millions of dollars of CannTrust stock in November 2018, soon after Paul and Aceto received the email from an employee that discussed the unlicensed growing.

The ball is now in Health Canada's court, as CannTrust waits for the federal cannabis regulator to decide whether to impose fines or other penalties, including possibly suspending the company's cannabis licences.

CannTrust is scheduled to report its next quarterly results in mid-August, which could disclose new details to investors and the public.

In the meantime, the whole fiasco is attracting international attention, especially from foreign financiers who are feeling a bit more hesitant about entrusting their capital with Canada's cannabis industry.

One well-known former cannabis industry CEO even thinks the CannTrust scandal could become an issue in the upcoming Canadian federal election.

New on The Leaf

  • Seeking rheumatic relief: Canadian seniors are turning to cannabis to help with the chronic pain caused by conditions like arthritis.
  • Downward trend: The rate of police-reported cannabis crimes took a nosedive from 2017 to 2018, according to national crime data.
  • More cannabis restrictions in Quebec: The Quebec government plans to ban the sale of certain types of cannabis edibles, and limit the potency of certain types of cannabis concentrates.

Elsewhere on the Weed Wide Web

  • On your mark, get set, vape: Auxly Cannabis Group's multi-million dollar deal with Imperial Tobacco is all about vape pens, reports CBC News.
  • Bring an ounce to Osheaga: The Montreal music festival is allowing cannabis on site, but only if it's a sealed, unopened, legally purchased container.
  • Illicit cannabis possession charge: Toronto police charged a 30-year-old man with possession of illicit cannabis after responding to complaints about the illegal CAFE cannabis dispensary in the city's downtown.


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