Former CannTrust CEO to stand trial for fraud

The Canadian cannabis industry is a highly regulated sector. The recent indictment of the former CEO of the giant CannTrust serves as a reminder of this. Investigators from the Ontario Securities Commission in Canada have charged Peter Aceto with fraud, along with two other former executives of the company.

In particular, the Commission suspects the three executives for growing cannabis without a license, over a period of ten months, at a site in Pelham, Ontario. These were not small quantities, since «Approximately 50% of the space designated for cultivation at the Pelham site did not have a Health Canada license», the Commission notes. In addition, investigators accuse CannTrust of concealing from its investors that some of the cannabis it sold came from illegal activities.

If the court finds them guilty of fraud and of withholding key information from investors, the three CannTrust executives face up to five years in prison. They could also be required to pay a fine of 5 million Canadian dollars.

CannTrust was worth more than a billion dollars

When the news broke in the summer of 2019, the scandal caused quite a stir. This was especially true given that the company was one of Canada’s largest cannabis firms, likely the sixth largest. Since then, it has lost 79% of its value. Its shares have also been delisted from the New York and Toronto stock exchanges, where they were previously traded.

At the time, its market capitalization was over a billion dollars, reminds The Financial Post. This former giant is now in free fall, and has even had to lay off 320 of its employees, and destroy 60 million euros worth of cannabis.

«I’m looking forward to the hearing, just like Peter [Aceto, the former CEO] and his family, where the evidence will show that he has always acted with integrity.», argues his lawyer, Franck Addario. The trial will take place on July 26 in Toronto. Given the seriousness of the charges, the hearing will take place in criminal court, not civil court. This is typically the case for investigations conducted by the Ontario Securities Commission.