Here's why the Cann Group (ASX:CAN) share price is in a trading halt

The Cann Group Ltd (ASX:CAN) share price is in a trading halt following what appears to be a paperwork stuff-up from the company.

Sebastian Bowen

Author Bio Sebastian Bowen has been a Motley Fool contributor since late 2018. Sebastian found his passion for writing and educating others about shares and all things finance after completing his studies in political, economic and social science and enjoys bringing this passion to life at the Fool. His investment philosophy is a simple one – buying high-quality companies at prices that make sense. When he’s not researching his next investment at all hours of the morning, Sebastian enjoys classic movies and likes to unwind with a good book, newspaper or record. Areas of Expertise Dividend investing ETFs Education Bachelor of Political, Economic, and Social Sciences (Government and International Relations), University of Sydney Social Media X/Twitter Favorite Investment Quote "In the short run, the market is a voting machine, but in the long run, it is a weighing machine." – Benjamin Graham

Published February 16, 2021 3:27 pm AEDT

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.

A frustrated businesswoman tries to figure out the numbers, indicating poor earnings results or share price movementon the ASX — Image source: Getty Images

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!

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