(Reuters) – CannTrust Holding Inc (TO:) said on Thursday it fired its Chief Executive Officer Peter Aceto, more than two weeks after Health Canada found the marijuana producer grew cannabis in unlicensed rooms.
“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,” the company said in a statement.
CannTrust also said that Chairman Eric Paul would step down after the board demanded his resignation.
The company’s U.S.-listed shares (N:), which have fallen more than 60% since the Health Canada disclosure, gained over 7% in extended trade on the news.
The management shake-up follows a report this week from The Globe and Mail that said Paul and Aceto were aware that cannabis was being cultivated in rooms at a growing facility in Southern (NYSE:) Ontario that had yet to be licensed by the federal regulator. (https://tgam.ca/2K3yBtV)
Robert Marcovitch, who is chairing a special committee looking into the company’s non-compliance with Health Canada, has been appointed interim CEO, CannTrust said.
CannTrust disclosed early in the month that Health Canada found that the company was growing cannabis in five unlicensed rooms between October 2018 and March 2019 and inaccurate information was provided to the agency by CannTrust’s employees.
The regulator then placed a hold on about 5,200 kilograms (11,500 pounds) of dried cannabis that were harvested in the rooms, while CannTrust also put a voluntary hold on 7,500 kg of cannabis inventory that was produced in the rooms.
CannTrust suspended the sale and shipment of all its cannabis products on July 11 while Health Canada visits and reviews its Vaughan, Ontario manufacturing facility.
The company also said on Thursday it was preparing to make additional operational changes in weeks ahead, adding that the financial impact of the Health Canada disclosure was still unknown.
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