CannTrust auditor withdraws pot firm’s earnings
TORONTO CannTrust Holdings Inc. shares fell as much as 10 per cent Friday before rebounding sharply late in the day after its auditor withdrew its reports on the Canadian cannabis company’s year-end and first-quarter results.
The move by KPMG LLP came after CannTrust said last week that it may have to restate its results for the periods ended Dec. 31 and March 31. The company also said it will likely miss the filing deadline for its second-quarter results after regulators found it grew pot in unlicensed parts of its Pelham, Ontario greenhouse. The company’s stock has fallen 56 per cent since the regulatory breach was first disclosed in early July. It ended the day at $4.21 up 40.8 per cent.
CannTrust recently shared with KPMG “newly uncovered information” from an investigation led by a special committee of the board, the Vaughan, Ont.-based company said in a statement Friday. That investigation led to the firing of chief executive Peter Aceto and the resignation of chairman Eric Paul last month.
CannTrust said KPMG was not aware of the problems when it issued the reports and had relied on representations made by individuals who are no longer at the company. KPMG will remain the company’s auditor.
Health Canada, the government agency responsible for cannabis regulations, is investigating. Penalties for the breach could include suspension or cancellation of CannTrust’s licence. The company hired Greenhill & Co. last week to explore potential alternatives, including a sale.
The Ontario Securities Commission said last week it has launched a joint investigation with the RCMP to examine unlicensed growing at CannTrust’s greenhouse.
The board appointed the special committee’s chair Robert Marcovitch as interim CEO in the wake of the departures.