BZAM granted CCAA protection due to ongoing financial challenges

by Grow Up Conference | Feb 29, 2024 | Media Partners, Stratcann

BZAM announced today that it has been granted Companies’ Creditors Arrangement Act  (CCAA) protection to restructure its business and financial affairs. 

The Vancouver-based cannabis producer says it has been unable to generate positive cash flows and has incurred cumulative losses, which it blames on margin pressures caused by competition and “fragmentation” of the cannabis industry,

The orders were granted by the Ontario Superior Court of Justice, and also applied to BZAM’s foreign subsidiaries.

Bennett Jones LLP is acting as counsel for the BZAM Group in its CCAA proceedings.

The company has been facing financial pressure that has led to the closure of several facilities, and included laying off about 90 people last September. 

At the time the company said it was focusing the scope of activities at its Pitt Meadows, BC facility and concentrating other activities at its Ancaster, ON facility (formerly TGOD) as part of its final phase of consolidation. 

The merger with TGOD was touted as a way to emphasize TGOD’s market strength in Quebec and Ontario with BZAM’s strong presence in western Canada. 

BZAM had also sold its facilities in Midway, BC and Maple Ridge, BC (formerly Agrima) and referenced a focus in 2023 on “streamlining” operations. A 2023 report also referred to the recent divestment in their Puslinch, ON facility and Edmonton, AB facility. 

Also in December, BZAM announced it has entered into a definitive share exchange agreement to acquire Final Bell Canada Inc. from Final Bell Holdings International Ltd, a hardware, packaging and brand development company serving the cannabis industry. 

The deal was said to make BZAM the fifth-largest Canadian LP.

Among other ventures, Final Bell has developed nicotine and cannabis vape hardware, co-founded Dosist, a cannabis vape company, in 2016, and operates a cannabis production facility in Ontario under WeedMD’s Starseed brand. Final Bell recently fully acquired Dosist. 

The company also lists cannabis brands operating in Canada like Tweed, Spinach, Sherbinskis, Foray, Ace Valley, B40, Beurre Blanc, Kolab, Cookies, and others among its clients, as well as Jeeter Canada.

The Company secured $1.79 million in borrowing from Stone Pine Capital Ltd. a company controlled by the Company’s largest shareholder and current Chairman. The promissory notes bear interest at Prime plus 8.0%, mature no earlier than January 31, 2025, and are subordinate to the Company’s Senior Credit Facility.

It’s most recent quarterly report showed a  $101 million loss in operations for the nine months ending  September 30, 2023, saying it had  insufficient cash on hand to fund its planned operations. 

The Initial Order  provides for a stay of proceedings in favour of the BZAM Group and the Non-Applicant Stay Parties, the approval of debtor-in-possession financing (“DIP Financing”) and the appointment of FTI Consulting Canada Inc. as monitor of the BZAM Group (in such capacity, the “Monitor”).  In addition, the Initial Order provides BZAM with relief from certain reporting obligations under securities legislation and stock exchange rules.

The company says the stay of proceedings and DIP Financing will give it time to consider potential restructuring transactions in a way that most benefits the value of its assets for the benefit of its creditors and other stakeholders. This may include the sale of all or substantially all of the business or assets of the BZAM Group through a court-supervised sales process.

The BZAM Group, the collection of BZAM’s Canadian companies, intends to seek Court approval to launch a sale and investment solicitation process for its business and assets (the SISP) on or around March 8, 2024. The SISP is expected to be administered by the BZAM Group and the Monitor. 

In connection with the SISP, BZAM expects to enter into a transaction with an entity related to an existing creditor and significant stakeholder of the company to acquire substantially all of the business and assets of the BZAM Group (a Stalking Horse Transaction). The Stalking Horse Transaction is expected to act as the stalking horse bid in the SISP. Additional details in respect of the SISP and the proposed Stalking Horse Transaction will be disclosed shortly.

In addition, BZAM also announced that Kay Jessel resigned from the board of BZAM prior to the board resolving to commence proceedings under the CCAA.

BZAM’s business operations will continue during the CCAA proceedings and the company claims it expects to “emerge from creditor protection as a stronger company with a healthier balance sheet.”

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Increased cost of production adds to growing concerns for Greenway

by Grow Up Conference | Feb 29, 2024 | Media Partners, Stratcann

Greenway Greenhouse Cannabis Corporation’s nearly $1.4 million in revenue in the last three months of 2023 still saw the Ontario cannabis producer in the red $1.6 million, according to their most recent quarterly report. 

This is an improvement from the previous quarter when the company reported a net loss of $576,461. For the first three quarters of 2023, the company reported a comprehensive loss of nearly $3.4 million compared to just over $1 million for the same period in 2022. 

Gross profits for the last three months of 2023 were also down compared to the same period in 2022, from $234,849 to $1.9 million.

The losses are attributed to increased production costs like labour and utilities, as well as a lower price per gram of cannabis. The cost of goods sold in the third quarter of 2023 was nearly $1.2 million compared to $508 thousand in the previous quarter. 

The company says it has insufficient cash to pay creditors for current working capital obligations and operations for the next twelve months, referencing “significant doubt about the Company’s ability to continue.” 

In addition, its quarterly report cautions that the company’s “ability to continue as a going concern is dependent upon its ability to obtain sufficient additional funding and to generate sufficient revenues and positive cash flows from its operating activities to meet its obligations and fund its planned investments and operations.”

The concerns are not new and have been mentioned in previous quarterly reports.

Greenway is sitting on more than $2 million in dried cannabis, compared to about $1.5 million in Q1 2023.

It operates a cannabis nursery facility in Kingsville, Ontario, and a flowering and processing facility in Leamington, Ontario.

It reports an average cash cost per gram of $0.75 for finished goods inventory on hand as of December 31, 2023. The company’s biological assets were comprised of 11,026 plants (March 31, 2023 – 6,519), which were, on average, 59% (March 31, 2023 – 43%) complete, and it was expected that they would yield approximately 1,364 kg (March 31, 2023 – 1,193 kg) of dry flower.

Biological assets refer to the value assigned to pre-harvest cannabis plants still in the process of growing, relating to expected yield.

BC cannabis company is bringing infused poutine to the Quebec market

by Grow Up Conference | Feb 28, 2024 | Media Partners, Stratcann

A British Columbia-based cannabis producer is adding a new twist on a distinctly Canadian dish, a cannabis-infused poutine sauce that will be available for sale in Quebec.

Rubicon Organics Inc., a cannabis producer with a focus on certified organic cannabis, announced today that its in-house brand, 1964 Supply Co., will be offering a cannabis-infused poutine sauce crafted with hash rosin.

The new “High Cuisine” poutine sauce, available now at the SQDC for about $8, is a mix that contains two containers, each with 5 mg of THC, and can be heated in a saucepan with water before being added to your fries and cheese curds, or anything else for that matter!

“We are excited to bring this one-of-a-kind product to the Quebec market,” said Melanie Ramsey, CCO of Rubicon Organics. “Our Cannabis-Infused Poutine Sauce is not only delicious but also provides consumers with a fun and innovative way to incorporate cannabis into their culinary adventures.”

Rubicon plans to expand distribution into other provinces in the coming weeks. 

Quebec has become a testing ground for more novel cannabis edibles that seek to conform to the province’s strict rules around edibles. Quebec does not allow the sale of edibles such as candies, desserts, chocolates, or other products deemed as being appealing to those under the age of 21—the legal age of access in Quebec. 

Instead, edible products in Quebec have included “cannabis bites” made of dates, hemp hearts, sunflower seeds, currants, and cinnamon, as well as unique products like infused beats, beef jerky, sausages, ramen, black currants, spicy crackers, figs, and cauliflower.

The SQDC claims it cannot provide details on how well specific edibles have sold but lists “ready to eat” products as just 0.18% of total sales in 2022-2023.