FIGURE 9-2: CannTrust Timeline of Key Events (2019–2020)
June 15, 2019 A former employee and whistleblower reports that CannTrust has been growing cannabis illegally in unlicensed rooms and actively concealing those activities from Health Canada, leading to a Health Canada audit. July 11, 2019 CannTrust strikes a special committee of independent directors to investigate the non-compliance. July 24, 2019 The Globe and Mail publishes an article alleging, according to email evidence, that CEO Peter Aceto and board chair Eric Paul had been aware of illegal cannabis production since as early as November 2018. Mr. Paul was the founder and former CEO of CannTrust and, therefore, not an independent director. August 12, 2019 CannTrust discloses another non-compliance notice from Health Canada in respect of a second production facility. September 17, 2019 CannTrust’s licence is officially suspended by Health Canada. October 24, 2019 On the special committee’s recommendations, CannTrust commits to an expanded training program, a strengthened governance and operations framework, improved infrastructure, and prescribed accountabilities and timelines for specified tasks. February 13, 2020 CannTrust announces it has appointed a new CEO and that the special committee’s focus would be on pursuing strategic alternatives for the issuer.
July 8, 2019 Health Canada issues a notice of non-compliance relating to cannabis grown in five unlicensed rooms between October 2018 and March 2019. July 22, 2019 CannTrust announces that it has filed a response with Health Canada regarding its notice of non-compliance and reiterates its commitment to identifying the root cause of all non-compliance issues.
July 25, 2019 CannTrust’s board terminates Peter Aceto with cause and Eric Paul is forced to resign.
August 15, 2019 CannTrust discloses that it is preparing a remediation plan under the supervision of its special committee. October 14, 2019 CannTrust’s board determines to destroy $12 million of unlicensed biological assets and $65 million worth of unlicensed inventory. December 5, 2019 CannTrust announces it has been served or become aware of class action lawsuits in both Canada and the United States regarding the drop in its share price after July 8, 2019. March 31, 2020 CannTrust obtains creditor protection under the Companies’ Creditors Arrangement Act (CCAA).
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Governance Insights 2020
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