For investors in cannabis stocks who believe that we are now in the Wild West where anything goes thanks to legalization, they should think again. That’s especially true for investors in Canadian cannabis stocks.
CannTrust shares are down sharply. | Source: Yahoo Finance
Canadian Cannabis Cops Clock Company Compliance
Health Canada has slapped CannTrust Holdings with a notice of non-compliance, which has resulted in a double-digit percentage downdraft in CannTrust stock.
“The non-compliant rating is based on observations by the regulator regarding the growing of cannabis in five unlicensed rooms and inaccurate information provided to the regulator by CannTrust employees.”
Health Canada has put a hold on over 5000 kg of dried cannabis that was produced by CannTrust in an unlicensed growing room. CannTrust claims that the growing occurred in rooms whose applications were pending.
In addition, CannTrust itself placed a voluntary hold on 7,500 kg of cannabis at another facility that had been grown under the same conditions.
CannTrust will engage in several corrective actions. These include a review of its processes and procedures, re-training employees to make certain they are current with compliance requirements, and the use of third parties to do an independent review of those requirements.
This Was Bound to Happen
This is something that investors and cannabis companies should have foreseen. There has been a lot of hype surrounding cannabis stocks, especially after legalization in Canada. It gave investors the impression that growing and selling cannabis was now a free – for – all.
That’s not the case, nor should it have been expected to be the case when government entities are involved.
Canada may have legalized cannabis and sent stocks soaring,