CannTrust: CEO Peter Aceto dismissed

CannTrust has dismissed Peter Aceto, who until now had been the company's CEO. This comes in the midst of’a Health Canada survey, who had discovered greenhouses in Ontario in early July that did not comply with current regulations. The company had erected false walls in its Pelham facility to conceal five unlicensed grow rooms, which had been in operation since late 2018. The company also requested and received the resignation of long-time board member Eric Paul.

«The investigation into the company's non-compliance with Health Canada regulations has uncovered new information that has led the board to decide to terminate CannTrust CEO Peter Aceto,» CannTrust said in a statement. The company did not specify what new information it had uncovered, but the Globe and Mail reported that Aceto and Paul were aware of unlicensed cannabis cultivation as early as November, citing internal company communications.

Yet the company wants to put this scandal behind it: «Our first priority is to complete our investigation, and bring the company's operations into regulatory compliance. Implementing the necessary changes is essential to the interests of our patients, customers, shareholders and employees,» said interim CEO Robert Marcovitch.

It won't be that easy, however. The company's shares have plummeted by more than 50% since the scandal broke, losing more than C$350 million in shareholder value. The company's reputation is tarnished, and as the legalization of recreational cannabis date only october 2018, For Canadians, all the big names in this market are still confusing.

Dave Scholz, vice-president of Montreal-based Léger, said the CannTrust effect was being felt throughout the industry. «It's not so much how the problem affects CannTrust , but rather how it affects the industry as a whole. It's a nascent sector where there's not a lot of public awareness. So there's a lack of differentiation between companies,» he said. CannTrust will therefore have to work hard to regain consumer confidence.

The non-compliant cannabis had been exported to Denmark and Australia, but was withdrawn from the market in the wake of the scandal. All shipments were held back in Canada, causing a shortage for the company's customers.