It’s been a rough day for those employed in the cannabis sector. Following the announcement early this afternoon that Hexo Corp (TSX: HEXO) (NYSE: HEXO) would be reducing its workforce by 200 people, Canntrust Holdings (TSX: TRST) (NYSE: CTST) made a similar announcement, with the firm intending to lay off 140 people from its current staff. The news follows last months cut of 180 employees at the troubled firm.
Canntrust’s latest round of layoffs is expected to reduce its monthly operational costs by approximately $0.4 million. Should the temporary reduction last for longer than 35 weeks, an additional $0.8 million will be required to be paid out in the form of severance to the affected employees. The reduction in staff is expected to begin this month and be completed by the end of 2019, affecting approximately 25% of the current workforce remaining at the firm. Whether or not employees are recalled depends upon the status of Canntrust’s licensing with Health Canada.
The additional layoffs at Canntrust comes as the firm faces renewed hope for its licensing status at Health Canada, following yesterdays news of Bonify Holdings being the first firm to see a suspended license reinstated. In conjunction with this evenings update, the issuer announced that a full remediation plan had been submitted to Health Canada on October 21, 2019. The plan outlines corrective action already taken by the firm, as well as what it intends to complete by the end of the first quarter of 2020.
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The plan is said to include a number of actions, including:
- An expanded comprehensive internal training program,
- A strengthened governance and operations framework,
- Infrastructure enhancements,
- Prescribed accountabilities and timelines for a variety of specified tasks,
- Destruction of both biological assets and inventory that were not authorized by the Company’s license
The company has also indicated that it is currently in the process of recalling all product currently remaining at provincial retailers and distributors.
With the submission of Canntrust’s remediation plan, the issuer announced that its special committee has concurrently completed its internal investigation. The findings were reported to the board of directors, as well as to that of Health Canada as a means of getting its operations back in line.
Lastly, Canntrust intends to file amended and restated financials for the year ended December 31, 2018, as well as for the first quarter of 2019 within the next 60 days. The second and third quarter interim financials and associated management discussion and analysis for 2019 will also be filed within the same time frame.
Canntrust Holdings closed today’s session at $1.33 on the NYSE.
Information for this briefing was found via Sedar 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.
