June 26, 2020 - A consolidated complaint was filed.
July 10, 2019 - An investor in shares of CannTrust Holdings Inc. (NYSE: CTST) filed a lawsuit in the U.S. District Court for the Southern District of New York over alleged violations of Federal Securities Laws by CannTrust Holdings Inc. in connection with certain allegedly false and misleading statements made between November 14, 2018 and July 5, 2019.
Vaughan, ON based CannTrust Holdings Inc. produces and distributes medical and recreational cannabis in Canada. CannTrust Holdings Inc. reported that its annual Total Revenue rose from $20.69 million in 2017 to $45.64 million in 2018 while its Net Income of $6.88 million in 2017 declined to a Net Loss of $13.55 million in 2018.
On July 8, 2019, CannTrust Holdings Inc. disclosed that Health Canada found that its greenhouse facility in Pelham, Ontario, is non-compliant with certain regulations. As a result, Health Canada placed a hold on 5,200 kilograms of dried cannabis harvested from the unlicensed rooms, along with an additional 7,500 kilograms voluntarily held by the Company, until the facility becomes compliant.
Shares of CannTrust Holdings Inc. (NYSE: CTST) declined from $10.17 per share on March 18, 2019 to as low as $2.50 per share on July 12, 2019.
According to the complaint the plaintiff alleges on behalf of purchasers of CannTrust Holdings Inc. (NYSE: CTST) common shares between November 14, 2018 and July 5, 2019, that the defendants violated Federal Securities Laws.
More specifically, the plaintiff claims that between November 14, 2018 and July 5, 2019, the Defendants failed to disclose to investors that the Company was growing cannabis in its Pelham greenhouse while applications for regulatory approval were still pending, that the Company’s Pelham greenhouse did not comply with certain regulations, that, as a result, the Company was reasonably likely to face an inventory hold by Health Canada until the Pelham facility becomes compliant with applicable regulations, that, as a result, the Company’s customers would face shortages and would likely seek product from CannTrust’s competitors, and that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.