Eagle-eyed followers of ASX cannabis shares might have noticed something strange about the Cann Group Ltd (ASX: CAN) share price this morning. It wasn't going anywhere.
Cann shares closed at 78 cents yesterday after rising more than 36% at one point last week. That comes after the Cann Group share price rose more than 190% between 20 November and 10 February. But 78 cents is where it will stay, at least for now. That's right in the middle of the company's 52-week range (29 cents-$1.26).
So what's going on here?
Well, this morning Cann released an ASX announcement that told investors the company was seeking a trading halt to its shares. The ASX has obliged, meaning the shares won't be available for trading again until at least Thursday 18 February.
Trading halt for Cann Group
Why the trading halt? Well, it's a little embarrassing for Cann. The company has told investors that:
The trading halt is requested pending the application to the Federal Court by the company seeking orders in relation to the company's inadvertent failure to lodge a cleansing notice under section 708A(5)(e) of the Corporations Act within the prescribed 5 day period after the issue of 306,846 shares in the company on 28 January 2021.
So someone stuffed up, evidently. The shares in question relate to the ASX notice the company posted on 28 January. This notice told the market that 306,846 options (with the code CANAF) expiring 31 March 2022 (with an exercise price of $0.46) would be converted into shares. Today's notice implies that Cann Group did not follow the correct procedure for lodging the proper paperwork with the ASX. It's unclear what will happen now, but investors might have to wait until Thursday for any more information.
Today's trading halt comes just one day after Cann announced the acquisition of the European company Harvest One Cannabis' Satipharm business for C$4 million in Cann shares. Satipharm has an exclusive license to develop and market the proprietary Gelpell delivery system for cannabinoids. Satipharm claims that this delivery system offers improved stability and bioavailability of cannabinoids compared to other formulations.
That announcement sent the Cann Group share price up almost 4% yesterday at market open before the shares cooled off over the day. Since that sale is to be funded by new Cann shares as well, investors might be hoping the company doesn't make the same mistake twice!
