CannTrust fires CEO amid unlicensed growing scandal

The company's chair has also resigned after cannabis was grown in unlicensed rooms, resulting in products being taken off shelves.
CannTrust-Facilities

Cannabis producer CannTrust has made changes at the top after spending most of July embroiled in a scandal about cultivating unlicensed cannabis.

Based on findings of a special committee formed by CannTrust to investigate unlicensed cannabis growing at one of its facilities, the company’s board has terminated CEO Peter Aceto. The board also asked for the resignation of chairman Eric Paul, who co-founded CannTrust five years ago.

Taking over as interim CEO is Robert Marcovitch, a board member who chaired the special committee. Marcovitch was previously president and CEO of winter sports equipment company K2 Sports, and chief executive of outdoor and campaign equipment company Coleman prior to that.

Aceto, who was previously president and CEO of Tangerine Bank, was hired as CEO of CannTrust last fall. He took over duties from Paul, who then assumed the chairman position.

Earlier this month, CannTrust acknowledged that it had accepted the findings of a non-compliance order it had received from Health Canada. The order said that unlicensed cannabis growing happened in five rooms at the company’s facility in Pelham, Ontario, between Oct. 2018 and Mar. 2019, while applications for licenses for those rooms were still pending. CannTrust then formed its special committee to investigate the non-compliance, alongside Health Canada’s own investigation.

Health Canada and CannTrust initially put a hold on cannabis cultivated in the unlicensed room pending a quality check, but provincial wholesalers stopped selling CannTrust products after the company acknowledged the unlicensed growing, with the company stopping all other sales shortly after. An FAQ on the CannTrust website says that while all medical products that have already shipped have passed third party testing by Health Canada, it will offer refunds to medical customers with unopened packaging who “do not feel comfortable” using it.

On Wednesday, a report in The Globe and Mail, citing internal emails it had obtained, said both Aceto and Paul had been told of the unlicensed growing seven months before Health Canada notified them about the issue. A promotional video posted to CannTrust’s YouTube page in February shows Aceto talking to one of the company’s growers outside a room where cannabis plants are clearly visible – which the Financial Post confirmed with employees was one of the unlicensed rooms.

In addition to selling medical cannabis under the CannTrust brand, the company also owns three recreational cannabis brands: Liiv, Xscape and Synr.g.