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Cannabis Weekly Round-Up: Ex-CannTrust Execs Get Fraud Charges
Securities regulators have laid charges on ex-CannTrust executives responsible for misdeeds in the company’s cannabis-growing practices
After a gigantic scandal that shook the entire Canadian cannabis industry, three former CannTrust Holdings officials were charged this past week by securities regulators.
Meanwhile, a cannabis operator is embarking on an international challenge by reorganizing its assets in Lesotho.
Keep reading to find out more cannabis highlights from the past five days.
Ex-CannTrust officials receive charges
In a joint effort with the RCMP, the Ontario Securities Commission (OSC) has laid charges on three former executives at CannTrust due to cannabis misdeeds conducted between 2018 and 2019.
The authorities charged Mark Litwin, Eric Paul and Peter Aceto with fraud. Separately, each received a combination of charges related to insider trading, misleading the OSC and the market and more.
In July 2019, CannTrust, then a leading publicly traded cannabis operator, was found to be using illegitimate growing standards based on rules set by regulator Health Canada. Additionally, the firm had covered up the improper actions — particularly Aceto, who came from a banking background and served as the fresh-faced CEO of the company, and Paul, CannTrust’s founder, former chairman and CEO.
The OSC said during the period of misconduct, CannTrust did not tell investors that nearly 50 percent of its growing space in Pelham, Ontario, wasn’t actually licensed.
“In press releases, corporate disclosures, analyst calls and prospectuses, they asserted that CannTrust was compliant with regulatory requirements, and they included all cannabis production in the company’s financial statements, without stating that half was grown without a license,” the OSC said.
MJBizDaily reported that the charges are considered “quasi-criminal,” indicating that jail time is a possibility. Health Canada previously elected not to issue direct fines despite the producer’s violations.
In a statement issued this past week, CannTrust said it was aware of the charges laid on its former executives, but confirmed no charges have been directed at the current company.
The charges come at an up-and-coming moment for what remains of CannTrust, since last year the entity received some cannabis licenses back from Health Canada at its facility in Vaughan, Ontario. This facility was found to be non-compliant based on a Health Canada review.
While Aceto and Paul have long been disassociated with CannTrust, Litwin was still a member of its board of directors until he stepped down in March 2021.
Cannabis company sets up African division
Halo Collective (NEO:HALO,OTCQX:HCANF) told investors it has adjusted its non-US operational assets, Bophelo Bioscience & Wellness and Canmart, into Akanda, a cannabis entity set up to oversee the firm’s Lesotho-based cultivation and processing campus.
It’s clear this move was done in an attempt to chase international cannabis opportunities.
“Akanda, with a unique strategy and scaled assets, will be positioned to be the low cost supplier of high quality and ethically sourced medical cannabis products to the fast-growing African, UK, European, and other international markets,” said Kiran Sidhu, CEO and co-founder of Halo.
Tej Virk has been named as executive leader of Akanda, and comes from a corporate finance and banking industry background.
“Akanda has the potential to be a truly great international medical cannabis company, cultivating high quality and ethically sourced cannabis at scale, leveraging trusted brands, at the industry’s lowest cost,” Virk said in this week’s press release from Halo.
Cannabis company news
- Charlotte’s Web Holdings (TSX:CWEB,OTCQX:CWBHF)announced the appointment of former Canopy Growth (NASDAQ:CGC,TSX:WEED) CFO Tim Saunders as a board member; he left the cannabis producer in 2019 after serving for four years. “Tim has deep knowledge of the global hemp and cannabis markets and has worked both in Canada and Europe,” Deanie Elsner, CEO of Charlotte’s Web, told investors.
- Curaleaf Holdings (CSE:CURA,OTCQX:CURLF)confirmed the opening of a second dispensary in the New Jersey state market. “We continue to work closely with state leadership and regulators to create a successful and sustainable adult-use market, and our expansion positions us to meet the market’s increasing needs while creating hundreds of new jobs in the state,” CEO Joe Bayern said.
- The Valens Company (TSX:VLNS,OTCQX:VLNCF)closed its acquisition of US-based CBD firm Green Roads for a total US$40 million, plus an additional US$20 million that will be withheld until certain conditions are reached.
- Australis Capital (CSE:AUSA,OTCQB:AUSAF)informed investors it wil be changing its corporate name to Audacious Brands as it emphasizes its pursuit of the US cannabis market. Additionally, the company announced an update on licensing in the state of Missouri.
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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.