The ex-
The acquittal marks a stunning reversal for the OSC, which had been pursuing its first court case involving a publicly traded cannabis company since it laid charges against the ex-CannTrust executives last year.
Following the acquittal, the OSC said it is "considering the implications of the decision and assessing its options" because
Industry observers were eagerly anticipating the outcome of the case because they felt a strong ruling in favour of the financial regulator would deter other pot companies from skirting the law.
The charges against former chief executive Aceto, board chairman Paul and vice-chairman Litwin centred on the
The OSC alleged the men used corporate disclosures to assert that they were compliant with regulations. They also accused Litwin and Aceto of signing off on prospectuses used to raise money in the
The men, who pleaded not guilty in October, were each charged with fraud and authorizing, permitting or acquiescing in the commission of an offence.
Litwin and Paul were also facing insider trading charges, and Litwin and Aceto were charged with making a false prospectus and false preliminary prospectus.
The accused, who attended court every day of the trial, remained stoic as their lawyers argued Thursday against the OSC’s request to have the case with withdrawn.
But when Justice
“For over two years,
“It is not possible to understate the effect of a wrongful allegation against a citizen.”
Addario added that Aceto, who was once the president and chief executive of
CannTrust fired Aceto in 2019, forced Paul to resign and Litwin later stepped down.
Asked whether Aceto will seek further reparations, Addario said, “Today is a day for celebrations, not for remedies.”
Meanwhile,
Their trial got underway in the fall with a debate about the scope of the fraud charges the men were facing, but in recent weeks the OSC had begun calling witnesses, including
However, the OSC’s case didn’t start to crumble until early December, when
Lee told the court growing in unlicensed rooms was "very openly" discussed at the company, including in front of some of the accused executives, but began walking back some of his claims during cross-examination from Fenton.
Fenton’s cross-examination presented Lee with documentation showing the entire Niagara facility was licensed between 2017 and
Lee testified the licences he was shown did not include any restrictions on what rooms the company could grow pot in. The OSC said Lee was not shown the licenses in a pretrial interview it completed with him.
Fenton then showed Lee documents where CannTrust was seeking ministerial approval to add rooms where unlicensed growing was alleged to that licence.
Another exhibit showed a
Lee, who was given immunity to testify, also admitted he mistakenly used the words “licensed” and “unlicensed” to describe some of CannTrust’s growing rooms and said “at times” he was confused by the Cannabis Act.
The licenses and Lee’s testimony call into question action taken against CannTrust by
“Growing in unlicensed rooms took place from
Phoena's chief commercial officer
Among the observations were "conducting unauthorized activities, namely producing cannabis in unlicensed rooms before obtaining approval from
"At that time, producing cannabis in unlicensed rooms was considered non-compliant with the Cannabis Regulations because Health Canada’s approval was required before making changes to a production site plan,"
In
It was delisted from the
This report by The Canadian Press was first published
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