Emerald pulls plug on affiliate’s federal cannabis license to decrease risk

The Toronto Stock Exchange building in downtown Toronto. - Matt Lamers photo

British Columbia-based Emerald Health Therapeutics has requested that Health Canada not continue with a cannabis processing license for one of its subsidiaries as part of a strategy to decrease unnecessary regulatory risk.

Federal cannabis licenses were highly valued commodities in recent years, but their worth has waned as the number of permits has swelled to nearly 300.

Some companies are finding that maintaining the federal licenses can be a burden when they’re not being fully commercialized.

Emerald “requested to Health Canada to not continue with our limited processing license at Avalite, as we do not perform any cannabis-related processing and or packaging at our Avalite site, nor do we have any interest or intention to do so in the foreseeable future,” CEO Riaz Bandali told Marijuana Business Daily.

“Consequently, we do not feel the need to continue pursuing or keeping (Health Canada) licenses that do not fulfill a targeted commercial need or purposes, hence our decision to request the discontinuance of our limited processing license at Avalite to (Health Canada).”

Avalite, an analytical testing laboratory, is Emerald’s subsidiary.

Emerald still directly holds federal licenses for cannabis cultivation, sale and processing at three sites.

Bandali said Avalite’s three remaining cannabis-related licenses – for analytical testing, R&D and controlled substances – are in good standing, and the company plans to utilize them.

In effectively giving up the processing license, Bandali cited quality-management-system best practices and a desire to decrease unnecessary regulatory risk.

“We do not believe that is beneficial or wise to maintain regulatory licenses that a corporation has no intent to utilize for commercial and/or scientific purposes for the foreseeable future,” he said.

Risk management could be a key theme entering 2020 as cannabis companies refocus on revenue-generating opportunities and look to shed superfluous risk.

From license suspensions to layoffs and disappointing earnings, 2019 has been a challenging year for many companies in Canada’s cannabis sector.

In October, Emerald slashed its workforce by 33% and replaced its chief financial officer, chief operating officer and president.

Shares of Emerald Health Therapeutics trade on the TSX Venture Exchange as EMH.

Matt Lamers is Marijuana Business Daily’s international editor, based near Toronto. He can be reached at [email protected].

Leave a Reply

Your email address will not be published. Required fields are marked *