the Licence of a Cannabis Operator: Is CannTrust (TSX:TRST)
the Licence of a Cannabis Operator: Is CannTrust (TSX:TRST) Next? This week, we learned that Agrima Botanicals had its cannabis licence revoked, becoming the first company to lose its licence. Agrima first had its licence suspended last fall after regulators found that unauthorized activities had taken place. Its a little unnerving forCannTrust Holdings(TSX:TRST)(NYSE:CTST) investors that might be wondering if their company might be facing asimilar fateafter recently learning that it had been growing cannabis in rooms it wasnt authorized to grow in yet. Were still early on in the process, and we likely wont know until later this month what Health Canada decides to do with the company. However, the problem is that the precedent may have already been set with Agrima, and that would be very bad news for CannTrust. Both companies engaged in unauthorized activities and promised to review the issues CannTrust and Agrima were both involved actions that were disallowed by regulators, and both companies also formed groups that promised to look into the issues that were raised by Health Canada. Unfortunately, it didnt end up with a favourable solution for Agrima and it could be a sign that CannTrusts efforts might not be sufficient to prevent the company from following a similar fate. While we dont know the details of the infractions and how similar they are, its clear that both were, at a minimum, unauthorized. And if the rumours of CannTrust building fake walls are true, then it becomes more difficult for the company to be able to try and claim ignorance on the matter. While any revocation may take several months to take place, if CannTrusts licence becomes suspended, then it could be the beginning of the end for the company. Its going to be a big test for Health Canada, as theresa lot on the linehere, potentially stripping a major producer of its licence and taking a significant amount of supply out from an industry thats been short of meeting demand since legalization took place back in October. The results could be dire Without a licence, there is no value in CannTrust beyond its net assets. By not being able to sell cannabis, theres no reason for investors to buy shares of the company. The stock has already been in a free fall, and losing its licence would be catastrophic. For Agrimas parent company, Ascent Industries, the company ended up having to file for creditor protection, as it faced liquidity issues as a result of the suspension of the licence. CannTrust could run into similar problems, and that means the stock could run further into the ground. However, if the circumstances are different enough, there might be hope of CannTrust being able to escape with just a fine. Theres a lot at stake for the industry, and its going to be an important decision for Health Canada. Taking the licence away from a small producer is one thing, but taking it away from a big company like CannTrust could have a devastating impact throughout the industry. You might be missing out on one of the biggest opportunities in Canadian investing history Marijuana was legalized across Canada on October 17th, and a little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom. Besides making key partnerships with Facebook and Amazon, theyve just made a game-changing deal with the Ontario government. One grassroots Canadian company hasalreadybegun introducing this technology to the market which is why legendary Canadian investor Iain Butler thinks they have a leg up on Amazon in this once-in-a-generation tech race. This is the company we think you should strongly consider having in your portfolio if you want to position yourself wisely for the coming marijuana boom.