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CannTrust Ousts CEO Peter Aceto, Forces Resignation Of Chairman

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CannTrust Holdings Inc. said Thursday that it has ousted Chief Executive Officer Peter Aceto, while Chairman Eric Paul has complied with the company's demand to resign. The Canadian cannabis company's shares gained more than 15 percent in after-hours trading on the New York Stock Exchange.

The management shakeup comes more than two weeks after Health Canada found CannTrust to be non-compliant with regulations for growing cannabis in unlicensed greenhouse rooms and also for providing inaccurate information to the regulator.

In addition, the Globe and Mail newspaper reported this week that both Paul and Aceto were aware cannabis was being cultivated in unlicensed greenhouse rooms at a facility in Southern Ontario, but did not take steps to prevent the illegal cultivation.

"The investigation into the company's non-compliance with Health Canada regulations and ancillary matters uncovered new information that has resulted in a determination by the Board to terminate with cause CannTrust CEO Peter Aceto," CannTrust said in a statement.

The company also announced other interim actions based on an ongoing investigation by a special committee of its board of directors.

CannTrust said its Board has appointed Robert Marcovitch to the role of interim CEO, with immediate effect. Marcovitch is chairing the special committee that it is investigating CannTrust's non-compliance with Health Canada regulations.

Marcovitch will step down as a member of the special committee. He served most recently as the President and CEO of K2 Sports, a manufacturer of winter sports equipment.

"Our first priority is to complete the remaining items of our investigation and bring the Company's operations into full regulatory compliance. Implementing the necessary changes is essential to the interests of our medical patients, customers, shareholders and employees," said Marcovitch.

CannTrust said it made a voluntary disclosure to Health Canada, based on new information uncovered by the investigation, and will fully cooperate with the regulator to resolve these matters.

The company added it will make additional operational changes in the coming weeks and noted that the financial impact of the Health Canada issue will still unknown.

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