More Bad News For CannTrust As Auditor Withdraws Reports
Less than a month after cannabis producer CannTrust Holdings Inc (NYSE:CTST) was issued a noncompliance report from Canadian regulators for growing marijuana on unlicensed property, CannTrust investors received some more bad news on Friday when the company said its auditor has withdrawn all its recent financial statements.
Last week, CannTrust said its financial statements from 2018 and 2019 may need to be restated due to issues related to unlicensed operations. On Friday, CannTrust auditor KPMG withdrew the reports in question after CannTrust shared “newly uncovered information” with the auditors.
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Why It’s Important
CannTrust investors must now interpret the vague language of the press release to try to get a grip on just how much of a financial impact the latest news will have on the company.
KPMG said it will remain on board as CannTrust’s auditor, but the company has said it may miss the filing deadline for its second-quarter earnings report. CannTrust also said KPMG was unaware of the licensing problems when it originally completed the reports and relied on representations made by individuals who are no longer employed by CannTrust.
“We will continue cooperating with our auditor and regulators, and take whatever steps are necessary to restore full trust in the Company's regulatory compliance,” CannTrust CEO Robert Marcovitch said in a statement.
CannTrust investors and cannabis investors in general are eager to put the licensing issue behind them. Canadian regulator Health Canada is conducting an ongoing investigation into CannTrust’s situation. Investors will be watching to see what type of penalties and/or fines Health Canada will ultimately impose on CannTrust and whether or not the company’s license is suspended or revoked.
CannTrust's stock traded lower by 4% to $2.16 at time of publication.
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