Tantalus Labs, a BC-based cannabis grower first licensed in 2017, has announced its closing up shop.
Dan Sutton, the company founder, announced today that Tantalus Labs LTD has filed a Notice of Intent for Restructuring (NOI) in the Canadian Federal Court.
Sutton says Tantalus is laying off the “substantial majority” of its team, “retaining only a few key employees to navigate the complexity of this restructuring process.” He also says the company seeks to “find a path forward for our brand and winning products to continue to deliver value to customers and distributors nationwide.”
“Despite continued market success by firms like Tantalus, the regulatory and taxation environment is persistently so burdensome that even today, five years into recreational legalization, free cash flow in the Canadian cannabis industry remains systemically challenged,” says Sutton.
“Tantalus is not alone,” he adds, “and in a recent survey of 120 small cannabis cultivators across Canada, 85 percent indicated that they believe their businesses will become insolvent over the next 6 months. No company of any size has been able to consistently demonstrate a sustainable business model given an excise tax rate of 25-45 percent of gross sales.
“This is a difficult day for Tantalus employees, shareholders, and creditors, and our only consolation is the knowledge that each individual on our exceptionally talented team worked tirelessly to persist as long as we could in these challenging conditions.”
Several former employees with the company shared the news on social media, as well.
I will say that Tantalus was a dream and the people I met and had the pleasure of working with have been some of the biggest blessings!,” shared Katherine L on Linkedin, a former Ontario sales manager with Tantalus.
The greenhouse cannabis grower, located in BCs Lower Mainland, operated initially under a medical cannabis licence before expanding into the non-medical recreational market following full legalization in 2018.
With a focus on sun-grown cannabis as a brand, Tantalus was also the recipient of a $2.9 million grant and contribution from the federal government for an expansion of its greenhouse.
Following the rapid expansion of the cannabis market in the lead-up to legalization and the first few years following, the industry has been undergoing some contraction recently, forcing companies to reconfigure business operations to meet current market demands or, in some cases, closing the business entirely.
Most recently, Fire & Flower, a sizeable retail cannabis chain, filed for CCAA protection (Companies’ Creditors Arrangement Act). Last December, MJBiz reported that 40 percent of the CCAA filings in Canada between January and December 22 involved companies operating in the cannabis space, most of them cannabis producers. MJBiz also covered the growing unpaid tax bill from many cannabis producers, including comments from Tantalus CEO and founder Dan Sutton.
Sutton has also been one of the leading voices trying to draw attention to industry challenges regarding high taxation rates and the impact of that on the ability of businesses to maintain profitability.
“It’s no exaggeration to say that, unfortunately, all businesses of any size in the production and processing side of the cannabis industry today….cannot pay (their) own bills and cannot make ends meet,” Sutton said earlier this year.