Reported by: Tony Lange

Charges against three former cannabis executives in Ontario could set a legal precedent for publicly traded cannabis companies that fail to comply with provincial regulations—notably securities offenses—in Canada. 

Legal proceedings are expected to begin Oct. 17 in the Ontario Court of Justice involving CannTrust Holdings Inc.’s (now doing business as Phoena Holdings Inc.) former CEO Peter Aceto, as well as Eric Paul and Mark Litwin, the company’s former board chairman and vice chairman. They face charges of fraud and of permitting unlicensed activity in connection to thousands of kilograms of cannabis grown in 2018, The Canadian Press reported.

In addition to charges of fraud and abetting in noncompliant cannabis cultivation, Litwin and Paul were charged with insider trading, specifically in relation to allegedly trading CannTrust shares while possessing undisclosed information regarding the unlicensed cultivation in question. 

Also, Aceto and Litwin were accused of making a false prospectus and a false preliminary prospectus that they signed off on to allegedly raise money in the U.S. The financial documents stated CannTrust was fully licensed and compliant with regulatory requirements, according to The Canadian Press.

Read full report: https://www.cannabisbusinesstimes.com/article/three-canntrust-executives-fraud-insider-trading-charges/