Shareholder Investigation of CannTrust

CannTrust Holdings Inc. (CTST) Accused of Misleading Investors

According to the filed complaint, in December 2018, CannTrust Holdings Inc. (CTST) disclosed its expansion plans in Pelham, Ontario. By April 2019, CannTrust announced that its greenhouse in Pelham, Ontario was fully licensed, stating that it was confident ” processes meet and exceed regulatory standards” and touting that this expansion would meet its plan to reach 50,000kg of capacity in its harvest. However, these statements were deliberately misleading as they omitted the material adverse facts that CannTrust was growing cannabis in its Pelham greenhouse while its application for regulatory approval was still pending. In July 2019, CannTrust revealed that its Pelham greenhouse was determined non-compliant with regulations and that it had been growing cannabis in unlicensed rooms, which led to a hold on inventory by Health Canada causing product shortages for CannTrust’s customers and patients. On this news, the stock fell $1.11, more than 22%, to close at $3.83. The stock has yet to recover.

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