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Buds & Duds: Cannabis stocks struggle again as unlicensed growing scandal worsens for CannTrust

A report from Globe and Mail indicated that CannTrust executives knew the company was growing marijuana in unlicensed rooms

Cannabis leaf and red down arrow graphic
Since Health Canada first uncovered that the company was growing in unlicensed rooms on July 8, CannTrust shares have plummeted almost 58%

Cannabis stocks continued to drop this week after the second bombshell report in as many days sent shockwaves through the sector.

The North American Marijuana Index, which tracks the top cannabis stocks in the US and Canada, fell 1.2% to hit 208.6 points. Elsewhere, the Horizons Marijuana Life Sciences Index ETF lost 1.1% to C$16.54 and the OTCQX Cannabis Index dropped 1.3% to 673.6 points.

Duds

CannTrust Holdings Inc (NYSE:CTST) (TSE:TRST) was by far the day’s biggest loser after a report from Globe and Mail indicated that company executives knew the group was growing marijuana in unlicensed rooms seven months before a Health Canada investigation revealed it earlier this month.

The report published Tuesday night laid out internal emails that demonstrated CEO Peter Aceto and Chairman Eric Paul were notified of the violation well before Health Canada discovered it earlier this month.

READ: Codebase Ventures launches new Code Cannabis Investments subsidiary

CannTrust stock swooned 20% to US$2.10 on the NYSE and nearly 22% to C$2.68 on the TSX.

Wednesday’s fall is the latest in what has been a disastrous month for CannTrust. Since Health Canada first uncovered that the company was growing in unlicensed rooms on July 8, its shares have plummeted by almost 58% in New York.

Another laggard was Curaleaf Holdings Inc (CSE:CURA) (OTCMKTS:CURLF), which continued to slide a day after the company was cautioned by the US Food and Drug Administration for allegedly illegally selling unapproved products containing CBD online with unsubstantiated claims that the products treat cancer.

Shares fell 2.3% to C$9.53 on the CSE and 2% to US$7.25 on OTC Markets.

Buds

A handful of companies were able to escape the downward pull, including 1933 Industries Inc (CSE:TGIF) (OTCMKTS:TGIFF), which grew by nearly 5% to C$0.43 on the CSE and 3.1% to US$0.32 on OTC Markets.

Elsewhere, MedMen Enterprises Inc jumped 3.3% and Golden Leaf Holdings Ltd increased 1.7% each on the OTC.

Contact Andrew Kessel at [email protected]

Follow him on Twitter @andrew_kessel

Quick facts: CannTrust Holdings Inc

Price: 1.12 CAD

TSX:TRST
Market: TSX
Market Cap: $158.13 m
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