Cannabis producer CannTrust tumbles after auditor withdraws its last 2 earnings reports amid illegal-growing scandal
- CannTrust Holdings fell 5% in early trading on Friday after its auditor withdrew its most recent quarterly and full-year results.
- The Canadian cannabis producer noted last week it may have to restate its results after regulators discovered non-compliant pot greenhouses in early July. The decision also resulted from newly revealed information from an internal investigation into the unlawful actions.
- CannTrust added it will likely miss the August 14 filing deadline for its second-quarter earnings report.
- Watch CannTrust trade live here.
Cannabis producer CannTrust Holdings dropped 5% in early trading Friday after its auditor withdrew results for the company's most recent quarterly and full-year earnings.
The Canadian company's reports for the full-year period ended December 31 and the quarter ended March 31 were withdrawn by auditor KPMG LLP, as the documents "should no longer be relied upon," a Friday statement said.
CannTrust said last week it may have to restate its earnings for the two periods, taking into account details revealed when regulators discovered unliscensed pot greenhouses in early July.
The company noted August 1 it would likely miss the filing deadline for its second-quarter earnings report. The report was estimated to be released on August 14, according to a CannTrust statement.
The document withdrawals were also attributed to "the recent sharing with KPMG of newly uncovered information" related to an internal investigation into the non-compliant growing practices. Health Canada - the agency that regulates cannabis growth - continues to investigate CannTrust and hold more than 12,000 kilograms of cannabis.
Customers and patients will see a temporary shortage as the company looks for new ways to boost production and make up for the held product, CannTrust said in a July 8 press release.
CannTrust recently fired its CEO and forced its president to resign as part of its internal investigation. It appointed an interrim CEO and announced it would work with Health Canada to resolve the unlawful actions.
"Our first priority is to complete the remaining items of our investigation and bring the Company's operations into full regulatory compliance," interrim CEO Robert Marcovitch said in an July 26 statement.
CannTrust is now down roughly 55% year-to-date.
The company has two "buy" ratings, three "hold" ratings, and one "sell" rating from analysts, with a consensus price target of $5.02, according to Bloomberg data.
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