CannTrust Holdings (TSX:TRST) (NYSE:CTST) has been among the worst performers among cannabis stocks in 2019, and it was understandable, considering the fact that the company’s production license had been canceled. Health Canada canceled its license after it was found that the company had grown cannabis at unlicensed rooms in its facilities.
However, in recent days, the stock has been showing signs of recovery, and much of the positive is perhaps due to the fact that CannTrust is seeking reinstatement of its license. The company had gone through a lot of turmoil when its offense was discovered, and eventually, its Chief Executive Officer Peter Aceto had to be dismissed.
That being said, there are now certain things that have created some optimism around the CannTrust stock. In its quest to rebound from the scandal, the company has appointed a new CEO. Last week the company announced that Greg Guyatt is going to take over as the new CEO of the company. Guyatt joined the company as its Chief Financial Officer earlier this month, and it would bring to an end the continued uncertainty about the leadership at CannTrust. His appointment resulted in a 4% rally in the stock.
However, more importantly, CannTrust has announced that it intends to submit documents to Health Canada pertaining to its remediation plans. The company has stated that it aims to submit the documents by the end of Q2 2020.
While it is true that it is an important development towards the path to possible reinstatement of the cultivation license, the company has warned that there are no guarantees that its license is going to be reinstated by Health Canada. Additionally, the company has not provided any kind of time frame when the reinstatement will happen, if at all. If the license is reinstated, then it could lead to a major rally in the stock, but in the meantime, investors need to keep a close eye on the developments.