CannTrust CEO Fired and Chairman Steps Down Following Internal Investigation
For the past few days, CannTrust’s troubles continued to snowball as more evidence of deliberate non-compliance gradually eroded their company.
With over 70,000 clients losing access to their medical marijuana, many (including the author of this article) were forced to jump ship.
Two days ago, we reported on recent revelations that high-level executives – including Aceto – knew about the rooms, in addition to several other violations. Their response, according to leaked e-mails, was to cover these up. Clearly, they failed.
Now, the debacle has finally come full circle, reports the Financial Post. Just days after CannTrust CEO Peter Aceto’s pledge for “appropriate actions” to bring the company back into compliance, he and Chairman Eric Paul now find themselves out of a job.
Peter Aceto Fired “With Cause”
Following the independent investigation, CEO Peter Aceto was fired “with cause.” In a statement following the decision, CannTrust issued a public statement:
“The investigation into the company’s non-compliance with Health Canada regulations and ancillary matters uncovered new information that has resulted in a determination by the Board to terminate with cause CannTrust CEO Peter Aceto.”
CannTrust also demanded the resignation of Chairman Eric Paul, who voluntarily stepped down. Paul was the original founder of CannTrust in 2014, eventually giving his CEO position to Aceto.
Now, both of them are paying the price for their participation in a cover-up that spectacularly backfired.
“Let the Dust Settle”
As the investigation continued, Aceto remained confident that he would escape unscathed. One Instagram user, accused Aceto of not being transparent with clients and investors. Aceto replied by relying on his record as a “trusted banker of the people” for over two decades.
But, as in most cases, responding defensively on social media rarely helps. In a reply that can only be described as “arrogant,” Aceto said:
“[A trusted banker of the people for 21 years], then 9 months later a thief/fraud? Ah, doesn’t make sense. Let the dust settle.”
Aceto did not seem to understand that a clean history does not mean someone cannot take a wrong turn at any moment. But more importantly, he was certain that the entire scenario would pass. Obviously, the dust did not settle; it was swept away, with him in tow.
Could Health Canada be Partly to Blame?
Although we cannot absolve CannTrust of its guilt, it is possible that a flaw in the system pushed the company into such murky waters.
One of the e-mails published in The Globe and Mail came from Eric Paul, stating:
“We need to clearly point out that we have been diligent in submitting the applications for each new area and they have been slow in responding. We are supporting the legislation and we need their cooperation. Politely as always.”
In Paul’s mind, Health Canada’s slow licensing process was enough justification for CannTrust to “jump the gun” and set up the grow rooms without approval.
Does this justify CannTrust’s actions? Of course not. But it might represent a serious problem with Health Canada’s efficiency that could lead to future problems.
A Silver Lining
Not all of the news around CannTrust is bad. Although shares dropped by 60% during the investigation, Aceto’s firing and Paul’s resignation gave the company a slight financial boost.
According to the Financial Post:
“CannTrust share jumped 16 per cent to US$2.27 in New York trading after the bell on Friday.”
This overhaul could mean the beginning of a slow recovery. But it is unlikely that CannTrust will reach its former glory anytime soon.
WeedAdvisor Support for the Regulatory Process
Although the system may need some adjustment, WeedAdvisor very much supports the governing bodies responsible for maintaining compliance.
CannTrust’s activities are a disservice to the company’s investors, clients and ultimately, the taxpayers as well.
WeedAdvisor looks forward to working with our government to provide practical business solutions that will help make its job simple and efficient.