CannTrust to sell legal pot again as it looks to recover from illicit production scandal

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The head of CannTrust Holdings Inc. said the past year has been a "long slog" to begin selling cannabis products in the Canadian recreational market, after federal regulators suspended the company's licences for growing pot in unlicensed rooms.

CannTrust Chief Executive Officer Greg Guyatt said in an interview that the company will re-introduce its brands to several provinces this month, following an 18-month period in which the company was embroiled in a regulatory scandal that ultimately led to it seeking creditor protection earlier this year. 

"It's been a long slog to get to this point, focused on remediation and compliance," Guyatt said. "It's been many long hours and a massive amount of effort from everybody."

The announcement marks a noted return for CannTrust following a tumultuous period in the summer of 2019 when a former company employee alleged that CannTrust was growing thousands of kilograms of cannabis in unlicensed rooms at its Fenwick, Ont. facility. 

The disclosure resulted in the termination of CannTrust's then-CEO Peter Aceto with cause, the resignation of Chairman Eric Paul, an investigation by Canada's largest securities regulator and Health Canada suspending the company's licences to cultivate and sell cannabis in Canada. 

Guyatt said CannTrust has "simplified" its operations in a broad effort to return to regulatory compliance, including enhanced training programs for its staff as well as a chief regulatory officer that reports directly to the company's board of directors. The company now has roughly 300 staff, as some employees returned to work following workforce reductions over the past year, he added. 

"The shutdown really allowed us to look at everything and figure out how we can run this business more effectively, to ultimately come to market with a stronger product offering and in a more simplified way," Guyatt said. 

Along with two brand offerings of dried flower that will soon be available in Alberta, British Columbia, and Ontario this month, CannTrust seeks to sell vape products next year as well as relaunching its medical marijuana business. 

Health Canada reinstated CannTrust's licences in September, which permits the company to produce legal cannabis again. In a court filing, CannTrust said it is using roughly 40 per cent of the available production capacity at its Fenwick facility, with about 73,000 plants currently planted. 

The company remains under creditor protection proceedings, which began in March and has been extended into January.  In a recent court filing, the company listed more than $1.4 billion in claims made against CannTrust by creditors. The company has approximately $90.5 million in cash left on its balance sheet. 

Guyatt said the company will consider returning to public markets once its creditor proceedings are over. CannTrust's shares were delisted from the Toronto Stock Exchange and New York Stock Exchange shortly after the company filed for creditor protection. 

"Our focus upon exiting CCAA is absolutely on being a ‘going concern’ and operating as a profitable, successful company," he said. 

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