CannTrusts Holdings Inc.’s former chief executive officer Peter Aceto along with former board chair and co-founder Eric Paul and ex-director Mark Litwin face charges over the infamous cannabis growing facility, which the company illegally operated between 2018 and 2019.
One of the charges is fraud which pertains to the willful deception covering the illegal activity.
The trio will possibly face jail for up to five years and a $5 million fine once proven guilty in a quasi-criminal case spearheaded by the Ontario Securities Commission (OSC).
Additionally, Paul and Litwin face charges concerning insider trading during the investigation carried out by Canada’s largest capital market regulator.
The two men signed off prospectuses intended to accumulate capital in the US. The prospectuses state that CannTrust Holdings Inc. is fully licensed and has satisfied the regulatory requirements.
Investors were unaware that about half of the entire cannabis growing area in its facility located at Pelham, Ontario, failed to secure proper licensing from Health Canada.
In total, charges against the former executives reach more than a dozen, including falsifying prospectus documents and providing misleading statements to the OSC.
While under investigation, the trio asserted that CannTrust was fully compliant with regulatory requirements set by the Canadian government. Such statements were documented through their prospectus, press releases, analyst calls, and corporate disclosures.
However, none of the allegations held up in court. On July 26, the accused are set to make their first appearance in the Ontario Court of Justice.
All about the CannTrust scandal
The unlicensed pot-growing activities of CannTrust created a huge stir not just within the company but in the entire industry.
The company is a leader in the Canadian cannabis industry, which has left competition stunned and spectators surprised such a scandal could transpire within their facility.
A whistleblower provided recordings of the illegal operations in June 2019. The whistleblower was identified as Nick Lalonde, one of the staff in the CannTrust facility.
Lalonde took some footage of the rooms where he was allegedly instructed to place plastic dividers to keep the illegal cannabis growing hidden from Health Canada.
The video footage taken from Lalonde’s phone was verified by a spokesperson from CannTrust and expressed that they were indeed taken from the company’s facility.
The illegal activity was said to pan out within a 10-month period from 2018 to 2019. Within the said period, millions worth of pots were produced.
As a result of the allegations, Health Canada suspended the company’s license to grow cannabis altogether in September. Moreover, thousands of kilograms of dried pot were confiscated by the federal agency.
Nonetheless, the licenses were reinstated back in August 2020 after a rehabilitation process was conducted to ensure that the company is strictly compliant with regulatory requirements. By
In December of the same year, CannTrust released a statement that they are returning to the marketplace. They have since launched Liiv and Synr.g, two new recreational brands.
