Ontario Securities Commission (OSC) prosecutors told a Canadian court on Wednesday that there was no reasonable expectation of conviction against three former executives of cannabis company CannTrust Holdings, dropping charges against the men. However, counsel for CannTrust’s former CEO Peter Aceto, former chairman Eric Paul, and former vice chairman Mark Litwin asked the judge to acquit them outright in the case.
“After careful consideration of the evidence during the trial, we are of the view that there is no reasonable prospect of conviction, even if prosecuted,” said OSC attorney Dihim Emami. Said Judge Victor Giorgas.
The lawsuit included allegations that Aceto, Paul and Litwin oversaw the illegal cultivation of thousands of kilograms of cannabis for the Canadian regulated market. In July 2019, CannTrust announced that Health Canada, Canada’s national health agency and the highest federal regulator of the cannabis industry, found its growing facility in Pelham, Ontario, to be noncompliant with several regulations. It was revealed that it was determined that The company accepted the findings and found that five rooms used to grow cannabis at its Ontario facility were not properly licensed for cultivation between October 2018 and March 2019. I pointed out that These rooms were not fully licensed to grow cannabis until April 2019.
“Our team has focused on building a culture of transparency, trust and excellence in all aspects of our business, including our interactions with regulators.” Aceto said In a CannTrust statement at the time. “We have made many changes with Health Canada to get this right. We made a mistake, but the lessons learned here will help us move forward.”
The OSC argued that CanTrust’s cannabis business was fully compliant with the regulations, as defendants claimed in company disclosures. Aceto, Litwin, and Paul were charged by the OSC and the Royal Canadian Mounted Police with sub-criminal offenses, including fraud, related to failing to disclose unauthorized cultivation to investors. Litwin and Paul were also charged with insider trading selling CannTrust shares after learning of the unauthorized cultivation allegations before they were made public. Additionally, Litwin and Aceto were charged with preparing a false investment prospectus and a false preliminary prospectus.
Testimony reveals weakness in prosecutor’s case
During the trial of three former executives last week, Graham Lee, former director of quality and compliance at CannTrust, said Health Canada staff inspected Ontario cultivation in November 2018 and April 2019. testified that he took no action in connection with it. Unlicensed grow room. However, on a subsequent visit, a Health Canada inspector asked about the unlicensed room.
“They asked me if there were any plants in the unauthorized room, and they were told otherwise earlier in the day. Lee testified.
As part of his testimony, Lee also said CannTrust staff staged photographs taken as part of a regulatory submission to Health Canada to obscure the purpose of the additional grow rooms. said there is However, he also said the employees had not been instructed to do so by senior management.
During cross-examination, the defense attorney presented evidence that the Ontario facility was permitted to grow cannabis without any reference to specific rooms. The revelations made it difficult for prosecutors to prove that unauthorized cultivation occurred at the facility.
Litwin’s attorney, Scott Fenton, presented Lee with an email sent on April 5 to other members of the CannTrust.
“But you told everyone you got your license now,” Fenton told Lee.
“Yes,” Lee replied.
“So you used the wrong term?” Fenton asked.
“Yes,” Lee admitted.
“Were you confused about the operation of cannabis law and its regulation?” Fenton asked.
“Sometimes,” Lee replied.
On Wednesday, prosecutors told the court that facts revealed during the trial made it impossible to obtain a guilty verdict in the case, and asked the judge to drop charges against the defendants. However, their lawyers have asked Giourgas to acquit outright of the charges against former CannTrust executives.
“I respectfully object to prolonging this.” Fenton said“The prosecution has determined it cannot be substantiated. It’s time to end it, and it should end today.”
Aceto’s attorney, Frank Addario, said, “For reasons you can imagine, we don’t know how apprehensive the defendants are about the end of this matter.
Prosecutor Eba said he received a request for acquittal that day and asked for more time.