VIDEO - Cannabis Company Has Meet Cute with DOJ

The second half of 2019 is in full swing, and August brought along a pair of critical announcements in the marijuana investment market.

The fallout from the scandal surrounding CannTrust Holdings (NYSE:CTST,TSX:TRST) continued as a provincial retailer decided to return all the product from the company.

Across the border in the US, a conversation between the Department of Justice (DOJ) and industry leading multi-state operators (MSOs) may offer a different perspective on the relationship between the federal agency and the cannabis market.

OCS returns all CannTrust marijuana

Last month, the Ontario Cannabis Store (OCS), a provincial distributor and store, elected to issue a return of product to troubled marijuana producer CannTrust Holdings.

This decision was born out of operational wrongdoings from CannTrust. In July, Health Canada, the country’s regulator for the cannabis industry, found that the company had been growing cannabis in unlicensed rooms at its Pelham, Ontario, facility.

CannTrust confirmed to the Investing News Network (INN) that all the product being returned by the OCS was produced in its unlicensed rooms.

In an email to INN, an OCS spokesperson said the decision to return the product was “consistent with the OCS’ obligation to operate its business in a responsible manner.”

During the month of August, shares of CannTrust continued to be affected by its problems. As of Wednesday (August 28), shares of the company in New York and Toronto were down by 23.39 percent and 22.65 percent, respectively.

Companies embrace DOJ interactions

As part of the quarterly earnings season, Charlie Bachtell, co-founder and CEO of Cresco Labs (CSE:CL,OTCQX:CRLBF), told investors that his company’s recent interactions with the DOJ ⁠— as part of an antitrust acquisition review ⁠— are a positive sign for the US marijuana space.

“The fact that a federal agency is reviewing (a mergers and acquisitions) transaction in this industry must be seen as validation,” Bachtell said during a call discussing Cresco Labs’ second quarter results.

“They are acknowledging the existence of this industry and running our transaction through the same process as traditional industries,” he said.

The Illinois-based MSO is attempting to complete its planned acquisition of Origin House (CSE:OH,OTCQX:ORHOF), a move designed to offer Cresco Labs a unique entry point into the California cannabis state program.

“It’s a new, emerging industry from their lens,” Josh Rosen, CEO of 4Front Ventures (CSE:FFNT,OTCQX:FFNTF), told INN as he faced a similar review.

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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: 4Front Ventures is a client of the Investing News Network. This article is not paid-for content.