CannTrust news for Friday about the company stopping cannabis sales has CTST stock falling hard.
CannTrust (NYSE:CTST) notes that the reason behind the stop in marijuana sales has to do with an investigation by Health Canada. This is the country’s regulator that handles issues with marijuana growers.
While the stopping sales are bad CannTrust news, this wasn’t unexpected by the company. CTST notes that it was the one that alerted Health Canada to possible compliance issues at its Vaughan, Ontario plant. The halting of sales was scheduled by the company and is voluntary, reports Barron’s.
The real danger of this CannTrust news is what it could mean for the company in the future. There’s already speculation that compliance issues could result in the marijuana grower losing its license to sell the drug. No longer being able to sell cannabis would be a major blow to CTST stock.
Of course, this also isn’t the first compliance issue that the company has had to deal with of late. It also ran foul of Health Canada earlier this week after an unannounced inspection. This found that the company was growing marijuana in rooms that didn’t have licenses.
“The possibility of a license suspension remains real; however, it is highly uncertain at this time,” Eight Capital analyst Graeme Kreindler said in a note obtained by Bloomberg. “In the event of a suspension, we believe that TRST’s cash position could sustain the company for a period of approximately 12 months considering last quarter’s operating burn was $19 million.”
CTST stock was down 13% as of Friday morning.
As of this writing, William White did not hold a position in any of the aforementioned securities.