Notorious cannabis producer CannTrust will destroy $77 million of weed inventory and plants to gain regulatory approval
- Cannabis producer CannTrust Holdings plans to destroy $65 million worth of weed inventory and an additional $12 million of plants to gain regulatory approval in Canada, according to a Monday release.
- The firm lost its licenses to produce and sell cannabis in September after Health Canada found multiple facilities non-compliant with national growth regulations.
- The company's stock traded as much as 25% higher on the news.
- Watch CannTrust trade live here.
Cannabis producer CannTrust Holdings plans to destroy $65 million worth of weed inventory in an attempt to gain regulatory approval in Canada.
The company lost its licenses to sell and produce cannabis on September 17 after Health Canada found multiple CannTrust facilities non-compliant with pot growth regulations. The destruction process will "free up much needed capacity" to store produced cannabis and complete its plans to return to compliant operations, the company said in a press release.
CannTrust will also destroy roughly $12 million worth of "biological assets" like plants. The inventory slated for destruction includes product returned by distributors, patients, and retailers.
"Our goal is to meet and exceed Health Canada's regulatory standard, and to rebuild the trust and confidence of our primary regulator, investors, patients, and customers," interim CEO Robert Marcovitch said in a statement.
CannTrust stock jumped as much as 25% on the news.
The company fired former CEO Peter Aceto in July and forced former president Eric Paul to resign amid investigation into the unlawful growing practices.
Health Canada found the company growing pot in unlicensed rooms in early July, and discovered five rooms unlawfully converted into product storage areas in mid-August.
CannTrust shares traded at $1.06 at 2:25 p.m. ET Monday, down roughly 78% year-to-date.
The company has one "buy" rating, one "hold" rating, and one "sell" rating from analysts, and a consensus price target of $1.51, according to Bloomberg data.
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