CannTrust Holdings Inc (NYSE:CTST) Takes Drastic Measures To Achieve Compliance

CannTrust Holdings Inc (NYSE:CTST) has decided to destroy some of its plants and inventory. These plants are worth C$12 million ($9 million), whereas the inventory is worth C$65 million. This decision has hit many by surprise, with some questioning the company’s move. They see the move as a drastic one!

Company’s stand regarding the matter

The company seems determined and says it won’t be distracted by opinions. It believes that what it is doing is for the best. Attaining the full regulatory compliance would mean much good for its business.

It was sometime back that the regulatory body Health Canada took to freezing half of the company’s marijuana stock. This was a major setback for a company that had already started counting its profits. From the estimates, CannTrust had said that from its calculations, the inventory and assets tied to regulatory matters amounted to almost C$51 million.

The Canadian health regulator had communicated to the company early in advance. It exacted its move at the point when it deemed it necessary. There are some set guidelines and principles that must be met in growing and even selling cannabis products. The regulatory body had to keep things in check.

CannTrust Holdings makes a serious move to rescue the business

CannTrust Holdings had been growing illegal pot, which as against the regulator’s rules. That was way back in July.

A drastic move needed to be made in this regard, and the victim turned out to be the company’s chief executive officer. He was sent packing, and the company hopes to do its best to win back the trust of its shareholders and product consumers.

The wave of cannabis legalization is still on course, with more states joining in. However, the legalization hasn’t yet been fully implemented. This factor means that companies dealing in the product haven’t yet been able to make the most out of the legalization wave.

The decision by the company has been applauded by market observers following closely on its progress. They attribute the recent rise in shares by 24% to the company’s decision. It was shortly after the company announced it would destroy the plants and its inventory that the shares spiked up!

On Monday, the company made a statement outlining that the regulatory body was on track, and it didn’t question its move.

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