November 3, 2022
Cannapiece Group Inc. et al. (the “Cannapiece Group of Companies”), obtained CCAA protection on November 3. Cannapiece Corp. (“CPC”), the wholly owned subsidiary, operates as a leading Canadian cannabis contract manufacturer, providing extraction, processing, and packaging services for its customers, which include large and industry-leading participants. CPC does not grow any flower and is strictly a business-to-business service provider. In the past year, CPC has seen its business suffer and losses grow due in part to substantial capital investments made to meet capacity requirements, a steep decline in the value of most publicly-traded cannabis companies in Canada (which form the basis of CPC’s client base), intense competition and significant price compression, and low market demand for cannabis products at the retail level, partially as a result of the illicit market for cannabis. Management has made efforts to address the financial challenges including by, among other things, significantly reducing staff, maximizing automation for efficiencies, increasing the efficiency of production staff and retaining consultants to assist in identifying opportunities to improve liquidity. Notwithstanding these steps, CPC projected net working capital deficits of approximately $3.5 million over the next 3 months, excluding servicing of CPC’s debt facilities. Absent the filing, and DIP financing, the Cannapiece Group of Companies would not have the liquidity required to fund its immediate operational needs, including payroll for employees, or to run a SISP. BDO was appointed as monitor. Counsel is Miller Thomson for the Cannapiece Group of Companies and Dentons for the Monitor.
By Dina Milivojevic