CannTrust Cuts 180 Jobs, 20% of Workforce Amid Scandal
The Dank Investor Posted On September 6, 2019 
CannTrust, what a mess. The embattled Canadian licensed producer reported in the late hours of September 5th a massive company restructuring cutting 20% of the workforce, a total of 180 jobs.
Recent regulatory troubles have been an absolute nightmare for CannTrust with the latest reporting coming out on September 6th claiming that the LP not only illegally grew cannabis but sold the cannabis grown from black market seeds and even changed the names of strains to meet regulations.
CannTrust was forced to halt all sales and has no incoming revenue, with many also stating they will be returning product to the provider.
“We have made the extremely difficult decision to restructure our workforce to reflect the current requirements of our business,” said Robert Marcovitch, CannTrust’s interim chief executive in a statement released late Thursday evening. “These changes also position the company to better serve our patients and customers with high quality, innovative products in the future,” he added.
The company said the layoffs will result in an annual cash savings of about $9 million, as well as a $2 million reduction in future severance costs. The majority of the affected employees were in cultivation and customer support roles, CannTrust said.
“We were shocked, just shocked. There was a reassurance from my senior manager that the company would not lay off this many people all at once,” said an employee of the company who was terminated, who spoke on condition of anonymity to Financial Post. The employee worked at CannTrust’s Pelham facility in the Niagara region, where Health Canada first discovered unlicensed growing activities in early July.
“I didn’t think this was going to happen because it was business as usual at the company, despite all the news reports about the unlicensed growing. We were told to keep cultivating, and just keep doing our jobs,” he said.
The round of layoffs comes as CannTrust continues to face a probe from the Ontario Securities Commission for misleading disclosures and possible insider trading in relation to the unlicensed growing. Health Canada is also investigating the licensed producer to determine penalties it will face for violating the department’s rules — CannTrust faces the prospect of losing its Health Canada licence altogether. Additionally, the BNN Bloomberg report of selling unlicensed cannabis adds major redflags for revenue and sales as well.
This round of layoffs is also the second major employee move in less than a month that CannTrust has made in the wake as they attempt to stop the bleeding. Three senior employees including the company’s master grower Brady Green, operations manager Cameron Fletcher and vice-president of quality operations Andrea Kirk left the company in late August.
“It does hurt to see new people being brought on, when myself and a lot of my friends just got the boot,” said the CannTrust anonymous employee.
CannTrust had previously fired chief executive Peter Aceto and forced the resignation of founder and chairman Eric Paul after initial reports surfaced of the illegal growing.
The company’s special committee, appointed by the board to investigate what led to the unlicensed growing has yet to present the findings from its investigation. In the meantime, CannTrust has hired Greenhill & Co. to explore a sale. “We are currently developing a comprehensive go-forward business strategy,” Marcovitch said in Thursday’s statement.
The unlicensed growing scandal has erased about $500 million in market value from CannTrust. The stock closed Thursday at $2.32, about 65 per cent lower than where it was before the scandal began and was currently trading at $2.24 CAD at time of publication. (12:58 PM ET)
