Two federally regulated cannabis companies, including one of the earliest licensed producers in Canada, sought creditor protection this week.
Wayland Group on Monday said it is seeking creditor protection to pursue restructuring and consider financing arrangements.
Wayland subsidiary Maricann became the 19th licensed producer in Canada by receiving its federal approval in early 2014.
NVS Chartered Accountants resigned as Wayland’s auditor, effective Dec. 3. PricewaterhouseCoopers is the company’s court-appointed monitor.
AgMedica’s court filing contained an ominous warning for the cannabis industry.
“It is the Proposed Monitor’s understanding that many other licensed producers of cannabis in Canada face similar pressures due to capital market conditions that have challenged the cannabis industry in recent months,” it stated.
In a Superior Court filing, AgMedica said its liquidity issues are a combination of:
- Price competition with the illicit market.
- Challenges with the rollout of retail models across the country.
- Learning curves in adjusting to customer demands.
- The retraction of capital raised from public investors to complete an initial public offering.
- Poor capital market conditions for the cannabis sector.
The company said a debt financing package fell through in late October.
Struggling to cope with lower-than-expected revenue, some of Canada’s largest cannabis companies in recent months have resorted to layoffs and closed cultivation facilities to conserve cash.
Quebec producer Hexo Corp. suspended cultivation at a Niagara facility it acquired only months earlier in a major M&A deal.
Recent cannabis industry pressures are not limited to Canada.
In October, American cannabis company DionyMed Brands – which had its head office in Vancouver, British Columbia, because of its Canadian stock listing – said it was unable to restructure its debts or find a buyer for the company.
Later that month, FTI Consulting Canada was appointed receiver and manager of DionyMed’s assets.
AgMedica is privately owned.
Wayland Group trades on the Canadian Securities Exchange as WAYL.
Read AgMedica’s court filing is available here.