Prosecution collapses against execs caught up in CannTrust cannabis scandal | 24CA News

The prosecution of three businessmen caught up in one among Canada’s most spectacular cannabis-industry flameouts suffered its personal collapse on Wednesday, as attorneys for the Ontario Securities Commission (OSC) moved to withdraw all expenses mid-trial.

But even defeat did not come straightforward for the prosecution: Defence attorneys for former CannTrust Holdings officers Peter Aceto, Eric Paul and Mark Litwin refused to merely have the fees dropped and held out for full acquittals for his or her shoppers.

“After careful review of the evidence during the trial, we are of the view that as charged, there is no reasonable prospect of conviction,” OSC lawyer Dihim Emami advised the courtroom. He requested for extra time to think about the defendants’ request for acquittals, nonetheless, saying it had solely been offered to him minutes earlier.

Scott Fenton, a lawyer for CannTrust’s former vice-chair Litwin, appealed to the choose to finish the matter “today.”

“I’m respectfully against drawing this out.… It’s time to end it for all the gentlemen.”

The sudden turnaround within the case is simply the newest twist in a saga that noticed one among Canada’s most dear publicly traded hashish firms shattered by allegations that it grew hundreds of kilograms of unlawful weed after which lied to buyers about it. Hundreds of jobs and practically a billion {dollars} in shareholder worth have been worn out, whereas the corporate and its executives, administrators, underwriters and auditors have been hit with a raft of class-action lawsuits on either side of the Canada-U.S. border.

Charges based mostly on alleged unlawful rising

The RCMP and OSC charged Paul, Litwin and Aceto —  who beforehand headed up Scotiabank’s online-banking subsidiary Tangerine — with quasi-criminal securities offences final yr.

The expenses got here after CannTrust introduced in July 2019 that Health Canada had realized of “the growing of cannabis in five unlicensed rooms” on the firm’s Pelham, Ont., greenhouse between October 2018 and March 2019, earlier than the rooms obtained the correct approvals in April 2019.

The OSC claimed the boys didn’t open up to buyers that just about half the rising house on the facility wasn’t correctly licensed, and that they used company disclosures to say that “CannTrust was compliant with regulatory requirements.”

Prosecutors have been additionally alleging Litwin and Aceto signed off on pitches to U.S. buyers that said CannTrust was totally licensed and compliant, and that Litwin and Paul traded shares of CannTrust whereas understanding concerning the allegations of unlicensed rising however earlier than it was publicly disclosed.

Trial testimony final week and submissions by defence attorneys, nonetheless, painted a distinct image: that the corporate’s whole greenhouse was licensed all alongside, and it simply wanted some routine approvals from Health Canada to begin rising pot crops within the further rooms.

Under cross-examination, CannTrust’s former director of high quality and compliance Graham Lee agreed with Fenton that the corporate’s hashish manufacturing licence from Health Canada did not really prohibit what rooms it might develop in.

That undercut the prosecution’s case, which hinged on the concept the corporate had been engaged in unlicensed hashish cultivation.

At one level, Lee testified, CannTrust employees did stage pictures as a part of a submission to Health Canada, in an try and disguise the additional rising rooms. But senior administration didn’t instruct him to do that, he stated.

Fallout

The penalties of CannTrust’s regulatory struggles have been huge: Days after it made its July 2019 announcement concerning the purportedly “unlicensed rooms,” the corporate voluntarily suspended gross sales of all its hashish merchandise. Then in September 2019, Health Canada formally suspended the corporate’s licence to promote. The subsequent month, the corporate stated it could destroy $77 million value of crops and stock.

As its income streams ran dry, CannTrust was compelled into chapter 11 safety in March 2020. Once value $1.5 billion on inventory markets, the business was rapidly delisted in New York and Toronto.

The firm, a few of its former executives and various its underwriters settled the cross-border class-action lawsuit for $83 million final yr, with none admissions of wrongdoing. Most of the corporate’s remaining property have been purchased earlier this yr by a gaggle of buyers led by a Dutch-based personal fairness agency. CannTrust then modified its title to Phoena Holdings Inc.

Defence attorneys didn’t need to remark Wednesday. Before the trial started, Aceto’s lawyer Frank Addario advised The Canadian Press that his shopper “behaved legally and with integrity during his time at CannTrust.”

The OSC, Ontario’s stock-market regulator, stated it would not remark whereas the matter continues to be earlier than the courtroom.

24CA News additionally reached out to Health Canada with questions. The company stated it could look into it.

The case is again in Toronto’s Old City Hall courtroom on Thursday for a dedication of whether or not all three males might be formally acquitted.