It would be in “everybody’s interest” for a white knight to take over embattled cannabis producer CannTrust Holdings Inc. (TRST.TO) and attempt to bring the company back into compliance with Health Canada regulations, according to one Bay Street portfolio manager.

“I think it’s in everybody’s interest for someone to take them out of their misery,” said Norman Levine, managing director at Portfolio Management Corp., in an interview on BNN Bloomberg Friday.

“It doesn’t mean as a shareholder you’re going to be taken out at a huge premium. You might get some premium out of this, but it won’t be at a huge premium.”

Levine’s comments come a day after BNN Bloomberg reported that at least two Canadian cannabis producers have been approached by bankers to gauge interest in acquiring CannTrust, according to multiple sources directly familiar with the matter. As well, one cannabis producer has reached out to Health Canada to inquire if the federal regulator would be amenable to another company taking control of CannTrust to ensure the company becomes fully compliant with growing and processing legal pot.

The behind-the-scenes activity comes after CannTrust was found to be non-compliant following a Health Canada inspection that discovered thousands of kilograms of cannabis believed to have been grown over a six-month period in unlicensed rooms. The company was due to respond to Health Canada’s audit by Thursday at midnight.

Spokespeople from Health Canada and CannTrust have yet to directly respond to BNN Bloomberg’s multiple requests for comment.

Levine stated that it was “beyond [his] ability” to understand how CannTrust’s management wouldn’t have been aware that the cannabis in question was being grown in unlicensed rooms from October 2018 to last March, and that the company’s recent stumbles demonstrate that “it’s not ready for prime time.”

“It just seems too blatant to have happened. I think ultimately senior management would have to go, no matter who owns the company or if it remains independent,” he said.

When CannTrust CEO Peter Aceto was asked by BNN Bloomberg earlier this week to comment on whether he had any current offers on the table to sell the pot producer, he stated his focus remained on getting the firm back to compliance with the federal regulator.

Levine added that despite its regulatory issues, CannTrust still has assets, brands and growing facilities that would be attractive for interested parties.

The developments surrounding CannTrust as well as Bruce Linton’s recent ouster from Canopy Growth Corp. (WEED.TO) are signs that cannabis companies need to get their acts cleaned up to start impressing large, institutional shareholders, Levine said.

“You need to start getting these acts cleaned up. Not everybody is going to survive,” he said.

“If you own marijuana shares until now, you’ve really been on the speculator, gambler side. It hasn’t been where conservative, professional investors have played much because we demand companies that have sales you can predict, earnings you can predict ... None of that exists yet, so it’s still too early for investors like us and most institutions to be in this space.”

Cannabis Canada is BNN Bloomberg’s in-depth series exploring the stunning formation of the entirely new – and controversial – Canadian recreational marijuana industry. Read more from the special series here and subscribe to our Cannabis Canada newsletter to have the latest marijuana news delivered directly to your inbox every day.