Cannabis stocks sank on Friday, as the CannTrust scandal continued to rattle investor confidence in the sector.
The North American Marijuana Index, which tracks the top cannabis stocks in the US and Canada, dropped 1.5% at 209.2 points. Elsewhere, the Horizons Marijuana Life Sciences Index ETF dropped 1.6% to C$16.85, while the OTCQX Cannabis Index dropped 0.7% to 707.7 points.
The duds led the way on Friday, with most cannabis stocks losing ground.
CannTrust Holdings Inc (TSE:TRST) (NYSE:CTST) shares tumbled sharply after news its independent auditor, KPMG has withdrawn the firm's most recent annual and quarterly results, due to "newly uncovered information."
Shares dropped 7.7% to C$2.77 in Toronto, and were down 6.2% at US$2.11 in New York on Friday.
In a statement, CannTust said KPMG's decision was based on new information shared by the company's special committee's investigation. The firm noted that it included information that led to CEO Peter Aceto and co-founder and chairman Eric Paul being ousted.
CannTrust has been embroiled in a scandal since early July, after Health Canada found it was growing cannabis in unlicensed rooms at its Pelham, Ontario facility.
Shares were down 3% at C$17.84 in Toronto, and off 2.9% at US$13.49 in New York.
The firm saw its revenue triple in the quarter to C$10.2 million from $3.4 million in 2Q 2018, however, it reported a C$17.8 million adjusted loss due to rising costs. The firm pointed to marketing expenses and higher processing costs as a reason and indicated losses may widen in the quarters ahead.
Despite the drops, a number of stocks were in the green on Friday.
Progressive Planet Solutions Inc (CVE:PLAN) (OTCMKTS:ASHXF) shares were on the rise as it outlined a deal with Valens Groworks Corp (CVE:VGW) (OTCMKTS:VGWCF) to collect cannabis waste denatured with zeolite.
Since April, Progressive Planet has been providing Valens with zeolite, a gray, gravely mineral that can be used in water purification, hazardous waste containment, and crucially, denaturing hemp and cannabis waste.
Now, the companies have signed a deal to have Progressive Planet collect the waste denatured using zeolite from Valens’ British Columbia subsidiary Valens Agritech Ltd. The company will blend the waste back into soil products, thus keeping it out of the landfill.
PLAN shares jumped 14% to C$0.04 in Toronto, up 24% at US$0.03 in New York.
“We are excited to provide this service to a world class company which will now divert all of its organic waste material from landfills thus avoiding the production of methane, which is a major contributor to global warming," Progressive Planet CEO Steve Harpur said in a statement.
READ: Progressive Planet inks deal with Valens Groworks to collect cannabis waste denatured with zeolite
Lexaria Bioscience Corp (CSE:LXX) (OTCMKTS:LXRP) shares were on the rise again after it announced on Thursday it has completed its collaboration with Canada’s national research body that led to new findings for the company’s patented DehydraTECH technology. The goal of the program was to find out whether DehydraTECH caused new molecular entities (NME) through its processing.
Shares were up 4.6% at C$1.13 in Toronto, up 8.9% at US$0.88 in New York.
DehydraTECH is a delivery platform that increases intestinal absorption, speeds delivery to the bloodstream and provides taste-masking benefits for orally administered bioactive molecules including cannabinoids, vitamins, non-steroidal anti-inflammatory drugs, nicotine and other molecules.
Contact Katie Lewis at [email protected]