After the scandal that enveloped the entire Cannabis industry in Canada, after CannTrust, an Ontario-based pot company, was discovered to be involved in unlicensed cannabis cultivation, the company has removed its chief executive, Peter Aceto, “with cause,” but chaos does not end there.
Aside from Aceto, the company demanded the resignation of its longtime chairman, Eric Paul, who has since handed his letter of resignation to the board.
“The investigation into the company’s noncompliance with Health Canada regulations and ancillary matters uncovered new information that has resulted in a determination by the board to terminate with cause CannTrust CEO Peter Aceto,” CannTrust said in a statement.
Five unlicensed cultivation rooms the company had been operating since late 2018 has been discovered last week when a whistleblower alerted Canadian Cannabis regulators, which in turn gave the CannTrust’s greenhouse facility in Pelham, Ontario a “non-compliant” rating. Because of the regulators’ rating, the company was forced to stop all sales operations until they can sort out their problem.
Some sources reveal that CannTrust has been aware of the unregulated and unregistered cultivation of marijuana since November but failed to stop the illegal activity. Some analysts believed that that’s when the CEO and the Chairman should have been kicked out of their positions.
“CannTrust is finally taking the steps of being accountable for its actions. Long overdue, but it’s happening,” Corey Herscu, CEO of cannabis-focused public relations agency firm Rnmkr in Toronto.
CannTrust’s stock struggled and went down over 50% since the controversy was disclosed to the public, wiping out more than 350 million Canadian dollars ($260 million) in shareholder value.
Because of the scandal involving CannTrust, analysts believe that its effect can be felt across the country and throughout the industry.
“It’s not so much as to how the issue affects CannTrust but how this issue affects the industry as a whole,” Dave Scholz, vice president at Montreal-based market research firm Leger and a reputation expert said. “This is a fledgling industry with not a lot of general awareness by the public, so there is a lack of differentiation between companies.”