Eric Paul stepped down as CEO of the Canadian producer on Monday. Peter Aceto, former CEO of online bank Tangerine, will take Paul’s place.
Shares of Canadian licensed producer (LP) CannTrust Holdings (TSX:TRST) took a hit early on Monday (October 1) after the company announced a new executive leader two weeks away from adult-use legalization in Canada.
Eric Paul, co-founder and CEO of CannTrust, confirmed his decision to step down from the role to make room for Peter Aceto as the new executive in charge. Aceto previously served as the CEO for online bank Tangerine.
CannTrust suffered a lag start to the trading week immediately following the departure of Paul. As of market close, shares of the company dropped 2.05 percent to finish with a price of C$12.45. During the day the stock reached a low of C$12.
Paul is not leaving the company entirely; he will step in as chairman of the board and will serve as a special advisor to the management of the company.
“It has been a great honour to serve as the CEO of CannTrust since its inception only five years ago. I take great pride in our team’s collective accomplishments and the incredible progress we have made in such a short period of time,” Paul said in the press release.
Aceto said CannTrust holds “limitless” opportunities ahead of itself. Canada is set to legalize recreational cannabis on October 17 and, despite such a critical time for the industry, Paul indicated the timing was just right for this transition.
CannTrust will make an entry into the recreational market due to its supply agreements with Ontario, Nova Scotia, New Brunswick, PEI, Newfoundland, BC, Alberta and Manitoba.
Thanks to these deals, adult-use cannabis products from the producer’s three recreational brands are guaranteed to become available to legal consumers.
At the same time pot stocks have raised the profile of the entire market, CannTrust’s value has lagged behind its competitors, according to financial experts.
As part of the Investing News Network’s (INN) Q2 cannabis update, Arthur Kwan, CEO and co-portfolio manager for CannaIncome Fund and managing partner with Athena Capital Advisors, said he valued the company despite not being as flashy as its rivals.
“We like the company because it’s a company that’s undervalued relative to its peers,” Kwan, whose fund invested in TRST, told INN in July.
CannTrust upgraded its shares from the Canadian Securities Exchange (CSE) to the Toronto Stock Exchange (TSX) in March. Since then, shares of the company have fluctuated significantly ahead of cannabis legalization.
Since its uplisting on the TSX, the company’s share price has risen 38.75 percent in value to reach a C$1.28 billion market capitalization.
CannTrust has hinted at the possibility of a Nasdaq listing, according to a tweet from chief investment officer for CB1 Capital, Todd Harrison. Paul later told The Globe and Mail he hadn’t made up his mind about the US listing.
“It’s a consideration, but we don’t have a definitive plan for it. No decision has been made to list,” he said in September.
It’s unclear whether new management will pursue the US listing more aggressively.
Meanwhile, fellow cannabis producer Tilray (NASDAQ:TLRY) was the first Canadian producer to list directly on a US exchange instead of uplisting from a Canadian counterpart.
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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.