It’s been a rough week for investors in Canadian cannabis companies.
And those who’ve seen the value of their shares decline can point their finger directly at CannTrust Holdings.
The Vaughan, Ontario-based medicinal cannabis company stunned the industry earlier this week when it announced that 12,700 kilograms of dried cannabis and dried cannabis equivalent were being held back.
This came after Health Canada discovered that at least 5,200 kilograms were grown in previously unlicensed rooms.
It’s shaken confidence in an industry that often emphasizes that it’s heavily regulated.
In 2018, CannTrust won the Top Licensed Producer of the Year at the 2018 Canadian Cannabis Awards. It was also honoured with top prizes for its flower strains and oil drops.
The Globe and Mail has suggested that CannTrust’s decision to grow cannabis in unlicensed rooms appears to have been an attempt to boost inventory in advance of the Canadian government legalizing cannabis last year.
But that shocker was followed by an even more troubling development for its shareholders.
On July 11, CannTrust announced that it was voluntarily halting sales and shipments of all of its cannabis products while Health Canada conducts a review.
‘At this time, the impact of these matters on CannTrust’s financial results are unknown until the regulatory review process is complete,’ CannTrust stated.
That sent the share price tumbling.
It closed at $3.34 on July 12, down from $5.05 at the start of the week. That’s a 34 percent decline.
But it wasn’t the only pot stock hit by a fever of selling. Aurora Cannabis Inc. closed at $8.81 on July 12, down 9.7 percent on the week.
Canopy Growth Corp. experienced an even sharper fall, dropping 14.4 percent on the week from $52.08 to $44.58.
This came after the July 3 news release that its co-CEO, Bruce Linton, was leaving.
Tilray fared better, only losing 6.6 percent on the week, closing on July 12 at US$43.34.
Aphria Inc. was down 8.2 percent on the week. Cronos Group saw its share price fall by 6.5 percent over five days.
For all these companies, their worst losses came on Friday, raising questions about what might happen when the markets open on Monday (July 15).
