Humble & Fume, a Canadian cannabis and accessories distributor with operations in Texas and California, received an initial creditor protection order from an Ontario court and intends to go private.
The distribution company will seek a sale and investment solicitation process in order to exit creditor protection as a going concern, according to a news release.
“The company believes that the protection afforded by the CCAA (Companies’ Creditors Arrangement Act) will allow the Humble Group to address its liquidity issues and stabilize operations,” Humble & Fume said in a Friday news release.
The Toronto-headquartered firm reported having enough liquidity to undergo the CCAA process, “and does not forecast a need for additional financing at this time.”
Humble employs 73 people, a court filing released Friday shows.
Its businesses include:
- B.O.B. Headquarters, a Brandon, Manitoba-based wholesale distributor of cannabis consumption accessories in Canada.
- Windship Trading, a Kyle, Texas-based wholesale distributor of cannabis consumption accessories in the United States.
- Humble Cannabis Solutions (HCS), which markets both cannabis and cannabis accessories to Canadian stores in Alberta, British Columbia, Manitoba, Ontario and Saskatchewan.
Another Humble business, HC Solutions Holdings, is not an applicant in the Canadian insolvency proceedings, according to an affidavit from Humble & Fume CEO Jakob Ripshtein.
HC Solutions Holdings is a joint venture between Humble and Green Acre Capital Distribution Corp. that “provides cannabis marketing and distribution solutions to other (license holders) in California.”
According to Ripshtein’s affidavit, previous Humble management “focused excessively on accessories revenue growth over profitability.”
The company suffered from “excessive inventory building up, which had the effect of eroding working capital and increasing storage costs,” the statement said.
“Much of this inventory was for slow turnaround and unpopular accessories, which could only be sold to customers at very low margins or at a loss.”
Despite 18 months of “right-sizing workforce and footprint,” the company is insolvent.
Humble reported a 25 million Canadian dollar ($18.7 million) net loss for the year ended June 30.
Humble expected that a June 2021 public listing on the Canadian Securities Exchange would bring new capital, but the drop in cannabis stock valuations “caused further difficulty in raising funds via the capital markets.”
The company reported in early December that it received a failure-to-file cease trade order from the Ontario Securities Commission.
The company hopes to revert to being privately held, saving costs of between CA$1.2 and CA$1.5 million per year.
Humble & Fume shares list as HMBL on the Canadian Securities Exchange and HUMBF on over-the-counter markets.
Solomon Israel can be reached at solomon.israel@mjbizdaily.com.
