CannTrust Holdings Inc. (NYSE: CTST) announced that, after the close of markets on April 13, 2020, the company received a cease trade order issued by the Ontario Securities Commission as a result of CannTrust’s failure to file the following periodic disclosure required by Ontario securities legislation:
- The Company’s audited annual financial statements for the year ended December 31, 2019;
- Management’s Discussion and Analysis relating to the Company’s audited annual financial statements for the year ended December 31, 2019;
- The Company’s Annual Information Form for the year ended December 31, 2019;
- Interim Financial Statements of the Company for the periods ended June 30 and September 30, 2019;
- Management’s Discussion and Analysis relating to the Company’s interim financial statements for the periods ended June 30 and September 30, 2019;
- Certification of the foregoing filings by the Company as required by National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings.
The CannTrust History
CannTrust’s troubles started last year when a Health Canada audit found that the company was growing cannabis in five unlicensed rooms and that inaccurate information was given to the regulator from CannTrust employees. CannTrust said that it accepted Health Canada’s non-compliance finding and took actions to ensure current and future compliance. At that time, the company said it has suspended all sales and shipments.
CannTrust attempted to sell the company. Since then CannTrust learned in August 2019 that the company’s facility has failed a recent inspection is troubling because it was supposed to have addressed problems from previous inspections in which the company was found to be growing cannabis in rooms that hadn’t received licenses.
As of March 20, 2020, CannTrust had a cash balance of approximately $145 million and it seemed as if the company would fight to try to get its licenses back. But the mountain of lawsuits and fighting those lawsuits would probably cost more than the $145 million it has and needs if it wants to get those licenses.
CannTrust obtained its initial order under the Companies’ Creditors Arrangement Act (Canada) when the company just decided to throw in the towel and quit fighting. “The Company has determined that it does not currently intend to devote additional time or money towards curing its public disclosure defaults by completing and resuming the filing of required reports under Canadian and United States securities laws. Upon completion of its CCAA process, and depending on the circumstances prevailing at that time, the Company may determine to resume devoting additional time and money towards curing its public disclosure defaults by completing and resuming the filing of required reports under Canadian and United States securities laws. However, there can be no assurance at this time that the Company will do so.”