Investors made it clear last week that they no longer trust CannTrust Holdings. The company’s regulatory breach may further erode consumers’ trust in the legal cannabis market as well.
The company’s stock plunged 48 per cent over the five trading days since regulators found it grew pot in unlicensed rooms and provided “false and misleading” information to inspectors, erasing $228 million in market value. CannTrust halted all sales and shipments of its products, and the Canadian government may suspend or even cancel its license in response.
“This is a pretty simple problem that’s going to lead to a lot of lost revenue for this company, you can already see it in the stock price,” said Allison Kopf, founder and chief executive officer of Artemis, a cultivation management platform that helps pot growers ensure they’re compliant with regulations.
CannTrust’s sales halt is only going to exacerbate the already chronic problem of product shortages and high prices in Canada’s legal pot market.
Statistics Canada reported last week that the price gap between legal and illegal pot is growing. In the second quarter, the average price of a gram of cannabis in the illicit market fell to C$5.93 from $6.23 in the first quarter, while the average price in the legal market rose to $10.65 from C$10.21. That’s the widest gap since recreational use was legalized last October.
Read more at bnnbloomberg.ca
