The spread of COVID-19 has seen typically stable sectors of the economy rival the chaos of the nascent cannabis industry. True to their reputation, these past few weeks have not been smooth sailing for pot companies.
Here’s a look at some of the cannabis-related stumbles you may have missed:
Green Growth Brands lays off about 800 workers
The Ohio-based cannabis company is in the process of selling an 80 per cent stake in its CBD business, which includes kiosk stores in about 195 malls in the United States. Green Growth Brands announced BRN Group as a potential buyer in late February, and expected a deal to close after a 30-day “go shop” period. So far, no buyer has been announced. Interim CEO Randy Whitaker recently told Yahoo Finance Canada that a deal is forthcoming despite the devastating hit to mall traffic caused by the unfolding COVID-19 pandemic.
The company announced the temporary closure of all its mall-based shops on March 19 to protect workers, as well as the suspension of online CBD sales. As a result, Whitaker said Green Growth Brands terminated 800 jobs. He said the reopening of the kiosks will be largely dependent on the decisions of a potential buyer.
“We did make a move to terminate all employees that were in that business,” Whitaker told Yahoo Finance Canada in an interview.
He said the combined effect of the CBD business’ negative cash flow, and the closure of scores of malls, was largely behind the decision. He also confirmed that a payroll delay occurred, and said it was rectified within 24 hours.
Green Growth Brands plans to shift focus to its dispensary businesses in states including Nevada, Massachusetts and Florida.
Harvest Health & Recreation & Verano Holdings throw in the towel on US$850M deal
Phoenix-based Harvest Health & Recreation announced on March 26 that the two companies mutually decided to walk away from the deal first announced on March 11, 2019. The combined company would have formed one of the largest cannabis firms in North America, with more than 200 facilities in 18 U.S. states, and roughly 1,800 employees.
The deal, one of the largest by value proposed in the legal cannabis space, faced a litany of regulatory hurdles as well as challenging capital conditions. Verano Holdings CEO George Archos said in a release that the spread of COVID-19 would also make it difficult for the necessary regulators to approve the transaction “within the established timeline,” without giving a specific date.
Cannabis companies line up for creditor protection
CannTrust Holdings (TRST.TO)(CTST), a company reeling from the fallout of an illegal cannabis scandal, was granted creditor protection by an Ontario court on Tuesday. It’s by no means the only pot producer to seek shelter recently from creditors and plaintiffs.
Kitchener, Ont.-based James E. Wagner Cultivation (JWCA.V)(JWCAF) announced on Wednesday that it secured protection under the Companies’ Creditors Arrangement Act (CCAA) in order to restructure the business and financial affairs.
Hamilton, Ont.-based Green Relief filed a Notice of Intention to Make a Proposal under the Bankruptcy and Insolvency Act on March 11. As a result, all creditors are stayed from commencing or continuing any proceedings against the company for 30 days.
Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.