Canadian cannabis company CannTrust Holdings Inc. CTST TRST has acceded to creditor protection under CCAA.
Trading of CannTrust has been stopped on the Toronto Stock Exchange and in New York. The company is expected to be delisted from both exchanges as a result of filing the for creditor protection.
CannTrust stated that this decision was taken in order to preserve the companies best interest.
"While today's news was a foregone conclusion, in my view, it is a stark reminder of how this industry and its actors are beholden to higher standards than most consumer product categories," Matt Markiewicz, Managing Director of Innovation Shares, which is behind the Cannabis ETF THCX, told Benzinga. "There should be no gray area when compliance is involved and CannTrust, along with its investors, have now paid a heavy price for violating Health Canada's rules."
Although the company had dropped the stock from the THCX portfolio in August 2019, the damage to U.S. investor confidence has persisted, Markiewicz explained.
"A lot of that has to do with the fact that this was one of the more visible publicly-traded cannabis stocks especially after its high profile equity offering in May 2019," he said. "With any nascent industry you expect several bumps in the road but hopefully they are not too costly from an investment perspective."
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