Troubled marijuana grower CannTrust Holdings ( CNTTQ -90.00% ) has replaced its leadership.
The company announced in a press release on Friday that it fired CEO Peter Aceto. Additionally, its board of directors demanded the resignation of its chair Eric Paul, which he agreed to. Both changes were effective immediately.
Board member Robert Marcovitch was named interim CEO. CannTrust did not mention whether it had appointed a new board chair.
In the press release, the company quoted Marcovitch as saying that "[o]ur first priority is to complete the remaining items of our investigation and bring the Company's operations into full regulatory compliance."
"Implementing the necessary changes is essential to the interests of our medical patients, customers, shareholders, and employees," he added.
CannTrust also said that it is gearing up to make "additional operational changes" in the coming days and weeks. It did not elaborate.
The personnel moves come several weeks after the company received a notice of noncompliance from Health Canada, the government body regulating marijuana growers in that country. The notice was in regard to unlicensed growing in five grow rooms in CannTrust's Pelham, Ontario, greenhouse. Although all five have been licensed since April, the company had apparently been growing product in them since last October.
Subsequent to receiving the notice, CannTrust said it accepted the regulator's finding.
Health Canada has not yet handed down any kind of sanction or fine for the noncompliance. It has the power to revoke CannTrust's licensing, should it deem that appropriate. The regulator has placed a hold on 5,200 kilos harvested in the five offending grow rooms; CannTrust voluntarily placed a hold on an additional 7,500 kilos of cannabis product.
Soon after receiving the notice, CannTrust formed a special committee of its board members to investigate the matter; in the committee's last update, released on Monday, it said the probe was ongoing.
In the press release regarding the personnel changes, the company said the changes were based on the special committee's work in the investigation.
The committee's original chairman was new interim CEO Marcovitch. He has been replaced in his former position by committee member Mark Dawber.
Analysts, shareholders, and others had called for CannTrust to make leadership changes in the wake of the scandal. Investors are clearly pleased that the company has taken action; CannTrust's share price closed up by nearly 17% Friday. However, the market capitalization is still low enough to engender speculation that the company might now be a takeover target.