CannTrust Holdings Inc. has become aware of the press release issued today by the Ontario Securities Commission (the “OSC“) announcing that three former directors and officers at CannTrust (namely, Eric Paul, Peter Aceto and Mark Litwin) have been charged with offences under the Securities Act (Ontario) in connection with their alleged involvement in efforts to conceal the illegal growing of cannabis at CannTrust over a 10-month period in 2018 and 2019 and, in the case of Messrs. Paul and Litwin, their alleged trading in the Company’s shares while in possession of the material, undisclosed information regarding the unlicensed growing. No charges have been laid against CannTrust, any of its subsidiaries or any of the current directors, officers or employees of CannTrust.
Mr. Paul is a former CannTrust chairman, who resigned all offices with the Company on July 25, 2019, in response to a demand made by the other members of CannTrust’s board of directors. That demand followed a recommendation made by a special committee of the CannTrust Board, which had been appointed earlier to investigate the circumstances surrounding the Company’s non-compliance with Health Canada regulations and ancillary matters. Mr. Aceto is the Company’s former Chief Executive Officer, who was terminated for cause by the CannTrust Board on July 25, 2019, also as a result of the special committee’s findings and recommendations. Mr. Litwin is a former director and vice chairman of the Company, who resigned from the CannTrust Board on March 12, 2021.
Since the completion of the special committee’s investigation in 2019, CannTrust has been building best in class governance and compliance structures and processes. Regulatory compliance, risk management, and effective oversight have become integral to everything the Company does. In August 2020, CannTrust’s operating licenses were restored by Health Canada and the Company resumed operations shortly thereafter.
CannTrust remains focussed on resolving its civil litigation claims and fully restoring its operations as a leading Canadian recreational and medical cannabis producer. The Company anticipates announcing the engagement of a replacement independent auditor during the third quarter and has initiated discussions with the OSC about proposing a plan and timetable for curing CannTrust’s historical disclosure defaults, with a view towards later applying to the OSC for a discretionary order revoking the OSC’s cease-trade order dated April 13, 2020. Those discussions remain at a preliminary stage, curing CannTrust’s historical disclosure defaults will require a considerable amount of management time and expense and there can be no assurance at this stage that the Company will be successful in obtaining an order from the OSC or obtaining a listing for CannTrust’s common shares before the end of the year, or at all.
