COVID-19 Could Further Delay Efforts to Reinstate Cannabis Licenses
VAUGHAN, ON, March 23, 2020 /CNW/ – CannTrust Holdings Inc. (“CannTrust” or the “Company”, TSX: TRST, NYSE: CTST) announced today that it received a notification from Health Canada as a result of current circumstances created by COVID-19. As a precautionary measure for the health and safety of its employees and the community, Health Canada’s Cannabis Directorate is reducing onsite field inspection activities until at least March 31, 2020.
CannTrust noted that many commercial enterprises, including the Company itself, have been reducing their onsite activities in response to COVID-19. Health Canada’s response to the COVID-19 pandemic could adversely affect the timing of the Company’s remediation efforts. On February 14, 2020, CannTrust submitted documentation to Health Canada regarding the completion of the Company’s remediation activities at its Niagara Facility in support of the reinstatement of that facility’s licences. CannTrust had anticipated that remediation activities at the Company’s Vaughan Facility would reach completion during the second quarter of 2020. The Company intended thereafter to submit the required documentation to Health Canada in support of the reinstatement of that facility’s licenses. These activities could be delayed as a consequence of COVID-19. Ultimately, any decision to reinstate the Company’s licenses, and the timing and conditions of any such reinstatement, will rest solely with Health Canada. No assurance can be given that Health Canada will reinstate the Company’s licenses at either its Niagara or Vaughan Facilities.
CannTrust remains in default of its disclosure obligations under securities legislation, has no meaningful revenues, has terminated or laid-off a significant portion of its workforce, is facing a variety of regulatory investigations, is facing potential delisting of its common shares by the Toronto Stock Exchange and New York Stock Exchange if it does not cure its disclosure defaults by April 15, 2020 and has significant contingent liabilities in both Canada and the United States, including for potential civil damages and potential criminal, quasi-criminal or administrative penalties and fines, which cannot be reasonably quantified.
As of February 29, 2020, CannTrust had a cash balance of approximately $159 million. CannTrust and its Board of Directors continue to monitor the Company’s cash balance and other factors carefully to, among other things, assess various strategic alternatives while pursuing the Company’s remediation work. CannTrust reiterated that the nature, timing, and outcome of the Board of Directors’ ongoing strategic review process will be influenced by, among other things, the Company’s ability to extend or renew insurance coverage on acceptable terms, whether or when Health Canada reinstates the Company’s licenses, how long it will take to restore operations and expectations regarding the resolution of the Company’s contingent liabilities, and potential civil, criminal, quasi-criminal, administrative and regulatory actions in both Canada and the United States.