If, like me, you thought that the ineluctable rise of cannabis stocks was a bubble or a scam or some other variety of fantasy, you likely now have more evidence for your case.
CannTrust Holdings Inc, one of the biggest players in Canada's "legal" pot market, have been reeling recently from various allegations of wrongdoing, including providing inaccurate information to regulators and growing cannabis without government approval. The board has fired its CEO and asked the Chairman to resign, and the Ontario Securities Commission had announced a joint investigation with the RCMP into the company's operations. Yesterday, auditors KPMG withdrew its report on CannTrust's 2018 and first quarter 2019 financial results, and issued the bald statement that the audited results can't be relied on to be accurate.
All pretty damning, you would think (not to mention embarrassing for KPMG). And how did the market respond? After a minor dip, CannTrust stocks ended the day UP 40.8%! As a Globe article laconically commented, "It was not immediately clear what prompted the surge". I'll say!
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