Charges have been laid against three former CannTrust directors after they got busted for illegally growing. Former Chief Executive Officer Peter Aceto, Company co-founder and Director Eric Paul, and Board Director Mark Litwin have been accused of fraud. In addition, Eric Paul and Mark Litwin are also facing charges of insider trading. If found guilty, the three men will face up to five years in jail and fines of up to five million dollars for each conviction. Here are the details about the CannTrust Bust.

The Bust

From October 2018 to March 2019, CannTrust was illegally growing and selling cannabis out of five unlicensed company rooms. This took place at their Niagara Greenhouse in Pelham, ON, before it received its license in April 2019. According to the non-compliance report, Health Canada seized 5,200 kilos of dry cannabis product from the Niagara facility and 7,200 kilos of cannabis oils and derivatives from the Vaughn site. 


The day that CannTrust admitted to the non-compliance report, company shares fell 22.5%. Health Canada had not shut down the Niagara or Vaugh site but they did seize a third of that quarter’s harvest. A lot of people were affected. Registered patients were forced to deal with medicine shortages and shareholders lost a lot of money. 

What did management have to say?

Many people were asking how something like this could happen and CannTrust released a statement on their website. “Our team has focused on building a culture of transparency, trust, and excellence in every aspect of our business, including our interactions with the regulator. We have made many changes to make this right with Health Canada. We made errors in judgment, but the lessons we have learned here will serve us well moving forward,” said Peter Aceto, Chief Executive Officer.

The remaining members of the Board of Directors conducted an investigation. On July 25, 2019, they terminated Peter Aceto with cause and demanded the resignation of Eric Paul. Mark Litwin resigned from the Board on March 12, 2021.

Larry, Curly and Moe

All three are facing fraud charges; Eric Paul and Mark Litwin have also been charged with insider trading. The fraud allegations include activities such as making misleading statements to investors, production and sales of unlicensed cannabis, and disregard for compliance. According to the Ontario Securities Commission, “Litwin and Paul also traded shares of CannTrust while in possession of the material, undisclosed information regarding the unlicensed growing.” None of these allegations have been proven.

CannTrust Responds

After charges were announced, CannTrust responded. This statement was taken from the press release, “Since the completion of the special committee’s investigation in 2019, CannTrust has been building best in class governance and compliance structures and processes.  Regulatory compliance, risk management, and effective oversight have become integral to everything the Company does.  In August 2020, CannTrust’s operating licenses were restored by Health Canada and the Company resumed operations shortly thereafter.

CannTrust remains focused on resolving its civil litigation claims and fully restoring its operations as a leading Canadian recreational and medical cannabis producer. The Company anticipates announcing the engagement of a replacement independent auditor during the third quarter and has initiated discussions with the OSC about proposing a plan and timetable for curing CannTrust’s historical disclosure defaults, with a view towards later applying to the OSC for a discretionary order revoking the OSC’s cease-trade order dated April 13, 2020.” 

Peter Aceto, Eric Paul, and Mark Litwin have their first court appearance on July 26, 2021, at Old City Hall Courthouse in Toronto.