What a difference a week makes in the marijuana trade – especially for investors of CannTrust Holdings (TSX :), (NYSE :). The Canadian cannabis producer's stock recovered on Monday, winning more than 19% on the day to close at US $ 3,055 (C $ 3.98), while trying to get back on its feet after a disastrous five-day haemorrhage that nearly half of had lost its market capitalization
The besieged marijuana producer hit hard last week, starting with a drop of more than 22% on Monday, after publicly acknowledging that marijuana had grown in five unauthorized areas in the greenhouse in Pelham, Ont. , between October 2018 and March 2019. The licenses for that space were finally obtained in April.
CannTrust Holdings price tag
Initially, the unveiling of the non-sanctioned cultivation areas seemed like it could just be a misunderstanding; possibly a miscommunication that caused the company to jump on the gun by commissioning growth chambers before the proper permits were secured. But in the middle of the week, retailers in the provinces of Alberta and Ontario, Canada & # 39; s largest pot market, pulled CannTrust products off the shelves after Health Canada, the federal legal marijuana regulator, had about 5,000 pounds of the company's dried cannabis had put on hold
The pot producer then voluntarily put an extra 7,500 kilos on hold. By Thursday, medical marijuana products that were thought to be linked to unlicensed rooms were quarantined by distributors in Denmark.
And the blows still came …
A report in Canada & # 39; s largest national newspaper on Friday struck again. Based on an interview with a former CannTrust employee, the company reportedly used "fake walls" in his greenhouse to hide the unlicensed cannabis plants from the so-called "misleading photos" filed with Health Canada. The stock fell by another 17% and closed on Friday at US $ 2,565 (C $ 3.34).
By the time the week was over, the CannTrust stock had lost no less than 48% of its value and wiped US $ 174 million (C $ 228 million) from its market capitalization.
To make matters worse, the accusation of "misleading photos" led to a complaint to the Ontario Securities Exchange, alleging that the company put investors at risk by not revealing that it was in conflict was with the regulations. The complaint depends on whether the accusations of the former employee constitute fraud
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CannTrust stopped all sales and shipments of its products pending Health Canada's evaluation, which fueled speculation that this would deepen the chronic shortage of legal cannabis and drive up prices
Losing Trust
As it seemed that investors were losing faith in CannTrust, industry observers wondered how much of the public would erode faith in the budding legal pot industry along with it.
This week the story takes a different turn. CannTrust seems to have regained its upward momentum. But will it be enough? Has anything really changed? Stay tuned. It is only Tuesday.
The Other Pot Stocks
What is the effect of all this on industry? All major pot stocks were supported on Monday:
Cronos Group (TSX :), (NASDAQ :), was 4.49% on the NASDAQ on the day and 4.86% on the S & P / TSX Composite
Hexo (TSX :), (NYSE 🙂 achieved 4.12% in New York and 3.95% in Toronto
Aurora Cannabis (TSX :), (NYSE 🙂 jumped by 3.4% in the United States and 3.63% in Canada
Canopy Growth (TSX :), (NYSE 🙂 added 2.63 on the New York Exchange and 2.78% on the TSX
Tilray (NASDAQ 🙂 achieved 2.03%
Aphria (TSX :), (NYSE 🙂 added slightly less than 1% on both sides of the border
