Cannabis

Candre Cannabis Inc.

Candre Cannabis Inc., a Sundre, Alberta-based cannabis company, was placed in receivership on March 6, on application by Enzio Holdings Ltd. In 2019, Enzio Holdings loaned $18,600,000 in principal to the company. As at December 31, 2022, the company was indebted to Enzio Holdings in the amount of $23,729,287.56, plus interest and costs. The company has defaulted on the loan, including by failing to make payments when due, and failing to remit amounts owing to CRA. A&M was appointed Receiver. Burnet, Duckworth & Palmer is counsel for Enzio Holdings and Bennett Jones is counsel for the Receiver. By Dina Milivojevic

11157353 Canada Corporation

11157353 Canada Corporation, the Canadian holding company of a group of cannabis companies that do business under the name “Materia” in Canada, Malta, Germany, and the United Kingdom, was placed in receivership on February 21, on application by Ela Capital Inc. In 2021, Ela Capital advanced loans to the company totalling approximately $2.8 million in principal. The company has failed to repay the loans on their maturity dates. In addition, it has defaulted on secured loans provided by Kanabo Group Plc. KSV was appointed Receiver. On the same date that the Receiver was appointed, the Court approved a sales process, a stalking horse APA and a KERP. Reconstruct is counsel to Ela Capital, Miller Thomson is counsel to the Receiver and Dentons is counsel to Reflourish Capital Limited, another secured creditor and the stalking horse bidder. By Dina Milivojevic

Geyser Brands Inc.

Geyser Brands Inc., the ultimate parent company of 0957102 BC Ltd. (d.b.a. Apothecary Botanicals) ("095"), which holds a license from Health Canada for the cultivation, processing and sale of medical cannabis, was placed in receivership on December 16, on application by 113 Royal Investments Ltd. ("113"), owed over $1.8 million, plus interest, on a secured basis. Since 2020, 113 has been providing financing to Geyser, which Geyser has used to maintain 095's business. 095 requires cash injections of approximately $70,000 per month in order to remain operating. 113 is not willing to provide financing to Geyser or 095 indefinitely, and wishes to realize on its security. BDO was appointed Receiver. Owen Bird is counsel for 113. By Dina Milivojevic

Lightbox Enteprises Ltd. dba Dutch Love Cannabis

Lightbox Enteprises Ltd. dba Dutch Love Cannabis, a licensor and service provider with respect to the "Dutch Love" cannabis store brand, continued its NOI proceedings (which were commenced on November 1) under the CCAA on November 24. Like many other cannabis retailers, Lightbox was negatively impacted by the challenging business climate for cannabis retail operations and the COVID-19 pandemic, which had a significant impact on both the company's sales and operations. In 2021, Lightbox retained Kronos Capital Partners Inc. and Canaccord Genuity Group Inc. to assist in selling assets to aid in its restructuring. Lightbox has negotiated three asset purchase agreements to sell to independent, third-party purchasers: (a) two unprofitable store locations in Kelowna and Lake Country; and (b) the assets related to a now closed store location in Saskatoon. Despite the pending sales, the company has been unable to restructure so as to be in a position to meet its obligations as they come due, or to broker a sale of its operations en bloc as a going concern. However, such efforts have attracted interest in a restructuring transaction from a number of prospective parties, and the company intends to run a SISP in the CCAA proceedings to maximize value for stakeholders. EY is the monitor. Counsel is McMillan for the company, Fasken for the monitor, McCarthy Tétrault for Sundial Growers, Lawson Lundell for BMO and Alpine Retail Center, Dentons for Roseterra Investments, Daoust Vukovich for Pensionfund Realty, MLT Aikins for LS Properties Meadows Market BT and Cannavore Cannabis, Koffman Kalef for Robson Promenade Holdings, Gowlings for Aquanta Group and Forthspace Cannabis and Crabtree Law for 1204393 B.C. Ltd. By Dina Milivojevic

Trichome Financial Corp.

Trichome Financial Corp. and various subsidiaries, which cultivate, process and sell premium and ultra-premium cannabis in Canada through their licenced subsidiaries, obtained CCAA protection on November 7. Prior to June 2020, Trichome was a specialty finance company, providing capital solutions to the Canadian cannabis market. One of Trichome’s loans was to the JWC Group. In April 2020, the JWC Group was granted protection under the CCAA. In addition to being the JWC Group’s senior ranking lender, Trichome was the DIP lender in the CCAA proceedings. On June 2, 2020, the Court approved a transaction between the JWC Group and Trichome for the sale of substantially all of the JWC Group’s assets to Trichome. Since then, Trichome's business has been focused on the cultivation, processing and sale of premium cannabis from its premises located in Kitchener, Ontario. Trichome has grown its consolidated revenue to over $30 million for the twelve months ending June 30, 2022. However, the business has been impaired by persistent and increasing liquidity issues. Trichome is now facing a severe liquidity crisis and has accrued significant accounts payable (approximately $7.7 million), of which approximately $7.4 million is overdue, with a large portion owing to essential suppliers. Trichome is currently unable to purchase cannabis from third-party suppliers and fill purchase orders, which has resulted in lost revenue of approximately $2 million in the third quarter of 2022. KSV was appointed monitor. Counsel is Bennett Jones for Trichome, Cassels for the monitor and Dentons for Cortland Credit Lending Corporation, the DIP lender. By Dina Milivojevic

Cannapiece Group Inc. et al. (the “Cannapiece Group of Companies”)

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

Lightbox Enteprises Ltd. dba Dutch Love Cannabis

Lightbox Enteprises Ltd. dba Dutch Love Cannabis, a licensor and service provider with respect to the "Dutch Love" cannabis store brand, filed an NOI on November 1, listing approximately $16.4 million in liabilities, including approximately $6 million to George Melville Holdings, $3 million to Sundial Growers, approximately $2.3 million to DHM and $2 million to Milan Trpin. In May, the company unsuccessfully sought to enjoin a former franchisee from operating a competing business at two locations in Timmins and Brampton, Ontario, after the parties' business relationship fell apart. EY is the proposal trustee. Counsel is McMillan for the company. By Dina Milivojevic

The Hypoint Company Limited (“Hypoint”), a Toronto-based cannabis company, and 2618909 Ontario Limited (“909”)

The Hypoint Company Limited (“Hypoint”), a Toronto-based cannabis company, and 2618909 Ontario Limited (“909”), the owner of the cannabis production facility on which Hypoint conducted business, were placed in receivership on October 28. Canadian Equipment Finance and Leasing Inc. (“CEF”), which has a first-ranking security on the HVAC equipment installed on the premises, but not the premises themselves, brought the receivership application. The mortgagees, which have registered mortgage interests against title to the premises, did not oppose the appointment of a receiver over the HVAC equipment, but opposed the appointment of a receiver over the assets of 909 (the premises). A receiver was ultimately appointed over all of the assets of both companies, and msi Spergel (GRIP), the firm nominated by the mortgagees, was appointed receiver. Counsel is Reconstruct for the receiver, Lerners for Albert Gelman (the receiver proposed by CEF), Goldman Sloan Nash & Haber for CEF, Teplitsky Colson for Chantal Bock, Rothstein Law for the mortgagees and Fasken for Beverly Rockliffe. By Dina Milivojevic

2618909 Ontario Limited and The Hypoint Company Limited

The Hypoint Company Limited (“Hypoint”), a Toronto-based cannabis company, and 2618909 Ontario Limited (“909”), the owner of the cannabis production facility on which Hypoint conducted business, were placed in receivership on October 28. Canadian Equipment Finance and Leasing Inc. (“CEF”), which has a first-ranking security on the HVAC equipment installed on the premises, but not the premises themselves, brought the receivership application. The mortgagees, which have registered mortgage interests against title to the premises, did not oppose the appointment of a receiver over the HVAC equipment, but opposed the appointment of a receiver over the assets of 909 (the premises). A receiver was ultimately appointed over all of the assets of both companies, and msi Spergel (GRIP), the firm nominated by the mortgagees, was appointed receiver. Counsel is Reconstruct for the receiver, Lerners for Albert Gelman (the receiver proposed by CEF), Goldman Sloan Nash & Haber for CEF, Teplitsky Colson for Chantal Bock, Rothstein Law for the mortgagees and Fasken for Beverly Rockliffe. By Dina Milivojevic

The Flowr Corporation, The Flowr Canada Holdings ULC, The Flowr Group (Okanagan) Inc. and Terrace Global Inc. (the “Group”)

The Flowr Corporation, The Flowr Canada Holdings ULC, The Flowr Group (Okanagan) Inc. and Terrace Global Inc. (the "Group"), a group of companies specializing in the cultivation, processing, distribution, and sale of packaged dried cannabis flower, pre-roll and other cannabis products, obtained CCAA protection on October 20. While the Group is headquartered in Toronto, Ontario, it operates from leased premises located in Kelowna, British Columbia. The Group incurred significant operating losses in 2021 and the first six months of 2022 due to a mix of unfavourable factors, including over-supply in the market of cannabis products, price compression and the impact of the illicit market. The Group’s operating cash burn amounted to approximately $26.5 million during this 18-month period. To address these financial challenges, management have taken significant measures, including cost cutting and selling surplus or non-performing assets, in order to repay indebtedness and increase the Group’s liquidity. However, these efforts were insufficient to address the liquidity challenges facing the Group. EY was appointed monitor. Counsel is Miller Thomson for the Group, TGF for the monitor and Norton Rose for the DIP lender. By Dina Milivojevic

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