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CEO of pot producer Cronos: Short seller Andrew Left is 'way off base' with his accusations

Key Points
  • Cronos' Mike Gorenstein disputes an allegation from Left that nondisclosure of the size of distribution deals with Canadian provinces is a deception.
  • Shares of Cronos tumbled 28 percent Thursday, after short seller Left put out a negative report.
  • The stock has regained much of its value since then and was up about 10 percent midday Wednesday.
Pot CEO responds to infamous short seller

Cronos Group CEO Mike Gorenstein says the Toronto-based marijuana producer is not disclosing the size of distribution agreements with Canadian provinces because the company doesn't want to overpromise.

He was responding to an allegation from short seller Andrew Left that nondisclosure is a deception.

However, Gorenstein said Tuesday on CNBC's "Fast Money" that "When we have had actual concrete, guaranteed purchase orders ... we disclose and give that information."

"We always err on the side of caution, being very conservative, and that's something that we've made sure to do here," he added.

Shares of Cronos tumbled 28 percent Thursday, after Left said Cronos appears to be "deceiving the investing public by purposely not disclosing the size of its distribution agreements with provinces."

The stock has regained much of its value since then and was up about 10 percent midday Wednesday.

In an email late Tuesday, after Gorenstein's remarks, Left confirmed to CNBC he added to his short position after the market close. "I am short," he said. "This stock is going to $3 [per share]."

Short selling is a practice in which traders can bet against a company by selling shares they don't own and buying them back at a lower price.

Gorenstein said on "Fast Money" that Left is "way off base."

When asked why Cronos did not disclose the size of potential distribution agreements with provinces, when other major companies like Canopy and Aphria do, Gorenstein maintained Cronos would only say where it had struck agreements.

"I think there is a big difference between saying, we are allocating 'X' amount to a province, versus a province saying, 'We guarantee we will purchase this from you, so model your revenue based on that,'" he said.

He added he's less concerned about demand, than about filling demand. "This is a consumer product and ultimately the consumer is going to decide who the winner is, that's why we focus on quality and having differentiated products."

Case in point, on Tuesday, Cronos announced a deal with Ginkgo Bioworks to derive natural components found in cannabis.

Cronos owns medical marijuana growing and distribution operations in Australia, Canada, Germany, and Israel.