AgriCann Solutions Corp. wishes to provide a brief update to shareholders since our April 9, 2024 Letter to Shareholders was publicly released and circulated.
- The Company’s wholly owned Health Canada licensed subsidiary, Newline Ventures Inc., continues as a bare-bones operation as existing inventory is sold off;
- The cannabis sector consultant hired in early April at Newline departed early without providing recommendations or a meaningful path forward to the board, ostensively for personal reasons;
- The accountant brought in at the Newline level to assume the duties abandoned by our former CFO failed to complete the Company’s expected December 31 2023 Q3 consolidated reporting obligations, but did update Newline’s bookkeeping;
- The Company remains under the “Cease Trade Order” (“CTO”) as issued by the BCSC;
- The Company is barred from accessing any public financing while the CTO remains in effect;
- To effect cannabis sales, licensees must prepurchase Federal excise stamps from the CRA plus applicable taxes and delivery charges. Stamp costs are substantial, along with the compliance and handling costs required for secured storage, transportation, administration, tracking, affixing, reporting, recordkeeping, and related procedures demanded at the Federal level. This financial burden is particularly disadvantageous to specialized craft growers, nurseries and marketers. OCS sales have completely shut down since Newline fell behind on excise payments;
- Further staff reductions and redeployments had to be taken to bring Newline overhead into line in an effort to reach sustainability and preserve asset value;
- A board member is currently considering funding an outside CPA to complete the consolidated accounting to meet the Company’s regulatory obligations, but the appetite for further support remains dependent on Newline’s operational situation, an admittedly circular relationship;
- The Company anticipates that it will not have the necessary resources to engage an auditor for its March 31, 2024 fiscal year annual audit, typically a $50,000 engagement demanding upfront payment under the circumstances.
Following the resignations of our CEO in December and CFO in February, the Company has struggled to find its feet. Company director and major shareholder Henk Vander Waal, our Master Grower, remains dedicated to the business operations at Newline. Interim CEO and director Tim Tombe, AgriCann’s largest shareholder, continues in an oversight capacity and has been instrumental in providing a financial lifeline for Newline to seek a sustainable path forward. COO Bobby Athwal has tried to fill the vacuum created on site in Vernon, in both compliance and sales, wearing multiple hats administratively with limited resources.
As the largest investors and shareholders of the Company, directly and indirectly representing 63.4% of AgriCann shares, remaining board members and officers have been committed to finding a path forward, but financial support is limited and can no longer be assured. Considering the current financial situation amidst an environment of escalating costs and regulatory barriers, it is increasingly unlikely shareholders will see a return on their investment. At this point, privatization may be the best option going forward and is being considered.
About AgriCann Solutions Corp.
AgriCann Solutions Corp. operates through wholly owned subsidiaries Newline Ventures Inc., a multi-licenced facility in nearby Vernon, and Craft Nurseries Canada Ltd., a Health Canada licenced cannabis nursery located in Lake Country, British Columbia.
