b'CASES GOODWINfailed to disclose in their regulatory filings and publicCannTrusts Vaughan, Ontario manufacturing facility, announcements that they were experiencing longerwhich was also deemed to be non-complaint. shipping cycles, the cycles impact on the companysHealth Canada ultimately suspended the companys financial results and the lack of internal control overcultivation and sales licenses indefinitely, andsince financial reporting, which led to regulatory scrutiny. thenCannTrust has taken steps to renew its licenses, The court appointed lead plaintiff and lead counsel onincluding announcing a corporation remediation plan, September 17, 2019. On October 31, 2019, plaintiffs filedsubmitting documents to reinstate the licenses at a notice of voluntary dismissal without prejudice. the Pelham facility, and announcing its intention to do the same with the respect to the Vaughan facility. CannTrust Holdings, Inc.: Huang v. CannTrustUltimately, Health Canada will review the information Holdings, Inc. et al., Case No. 1:19-cv-06396- submitted and determine the appropriate next steps, JPO (S.D.N.Y., July 10, 2019) which may include license renewals and/or issuance of any penalties and fines. For CannTrust, the compliance CannTrust Holdings, Inc. (CannTrust) is a Canadian- issues in 2019 followed similarly daunting compliance based company and licensed producer and distributorissues in 2016 when it was subject to the seizure of medical and recreational marijuana. of hundreds of kilograms of cannabis following an inspection of its facilities regarding a number of In November 2018, the company announced its 2018compliance failures. third quarter results, which showed an increase in its revenue and disclosed that the company entered into nine new supply agreements with CanadianAn investor filed a putative class action provinces. CannTrust also noted its expansion plans for its greenhouse facility in Pelham, Ontario, which wasalleging violations of Sections 10(b) and subject to regulatory and zoning requirements. They20(a) of the Exchange Act, and Rule 10b-stated that they filed ten permits and were working5 against the company and its executives, with the municipality to have all the permits approved.including its CEO and CFO, in connection The company continued to report positive financialwith the companys alleged failure to disclose results for the fourth quarter of 2018 and first quarter of 2019. In July 2019, the company disclosed that Healththat the company was growing cannabis at Canada, the countrys regulatory agency overseeingits Pelham facility while out of compliance, public health, had found that the Pelham facility waswhich subjected the company to regulatory non-complaint with certain regulations. Specifically,scrutiny and caused shortages that impacted Health Canada determined that CannTrust was growingits customers. thousands of kilograms of cannabis in unlicensed rooms at the Pelham facility between October 2018 and March 2019 and provided false and misleading information to federal investigators. As a result, HealthAn investor filed a putative class action alleging Canada placed a hold on CannTrusts Pelham inventoryviolations of Sections 10(b) and 20(a) of the Exchange (amounting to approximately 5,200 kg of driedAct, and Rule 10b-5 against the company and its cannabis) until the Pelham facility was deemed to be inexecutives, including its CEO and CFO, in connection compliance, and CannTrust also instituted a voluntarywith the companys alleged failure to disclose that the hold of approximately 7,500 kg of dried cannabiscompany was growing cannabis at its Pelham facility equivalent. The announcement further stated thatwhile out of compliance, which subjected the company customers and patients would experience temporaryto regulatory scrutiny and caused shortages that product shortages due to the hold. That same day,impacted its customers. CannTrusts stock fell more than 22% to close atThe parties have engaged in motion practice in $3.83 per share, and over a five-day trading periodconnection with consolidating the complaints. The CannTrusts stock fell in excess of 40%. Followingparties have submitted briefing on a contested motion the Pelham facility disclosure, regulators investigatedto consolidate the related cases. This case is ongoing.12'