The saga unfolding this week for CannTrust Holdings (TSX: TRST) (NYSE: CTST) appears to have no end in sight as further developments have arisen on the story related to exported cannabis product.
BNN Bloomberg has reported today that the Danish Medicines Agency, which is the pharmaceutical authority in Denmark, has been in contact with Health Canada related to illegally grown cannabis that was exported to the country. CannTrust Holdings partner in the country, Stenocare, has reportedly quarantined the illegal product, and is awaiting confirmation from government agencies on what to do with it. It will be potentially destroyed depending upon guidance from Health Canada.
Stenocare has reported that only one “very small batch” was related to product grown illegally by CannTrust, and that it is continuing to work with CannTrust on the matter.
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The identification of CannTrust’s illegally grown product being shipped to other jurisdictions potentially raises the bar for sanctions from Health Canada, as it now has to deal with an international issue which further magnifies the headache related to the event.
Questions are now being raised by investors in relation to the recently announced shipment of product to Australia which reportedly occurred last week. Should this product prove to have been illegally grown as well, CannTrust management will be faced with further questions on their operations.
Back home in Canada, provincial distributors have begun to pull product from store shelves as a result of the finding. The Ontario Cannabis Store is one of the first found to have done so, with one Twitter user identifying all that numerous dried flower products are no longer listed on the distributors website.
Meanwhile, analysts continue to downgrade price targets for the equity on both sides of the border. The Royal Bank of Canada and Bank of Montreal both reduced their targets today for the TSX listed equity, to $5.00 and $6.00 respectively.
CannTrust Holdings is currently trading at $4.71 on the Toronto Stock Exchange.
Information for this briefing was found via BNN Bloomberg and CannTrust Holdings. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
