AgriCann shuts down cultivation for three months

Vancouver-based  AgriCann Solutions Corp. issued a letter to its shareholders saying it would shut down cultivation operations for three months as the company goes through major changes.

Chairman Rob van Santen, to whom the letter was attributed, blamed the company’s growth attempts in 2023, which burned through cash as it missed its projections. In 2023, AgriCann was able to raise $307,203 through an offering and completed a $1,941,780 shares-for-debt settlement at $0.10 per share which was intended to convert loans and accruals to equity to clean up the balance sheet. the company also closed a non-brokered private placement for $1,019,236 at $0.10 per share. The company said in the letter that the funds raised were allocated towards re-establishing and expanding operations from Lake Country into a purpose-built facility in Vernon offering scalability with superior Health Canada licensing.

Part of the challenge for AgriCann was its acquisition of Newline Ventures, which took much longer than expected. The deal took almost a year to close. Newlin expands the company’s operational capability by adding cultivation, processing, medical sales, and Cannabis 2.0 licenses to the sole nursery license already held through Craft Nurseries.

Not enough

Santen told investors that despite the efforts, it wasn’t enough. The directors were advancing cash to the company while there was no meaningful cash flow nor projections of cash flow.

On Dec. 7, the letter states that the CEO presented a request for an immediate $200,000 to cover operating expenses with the expectation that $500,000 would be required to execute his plans. The letter stated, “This came with a demand for an immediate release of the recently awarded management retention and incentive shares, despite their being set up under an executed escrow and pooling agreement with performance criteria. The Board pushed back on these demands.”

C-suite shift change

On December 11^th Adam Sancewicz resigned his CEO position with AgriCann. Founding Director and former COO Tim Tombe immediately assumed an Interim CEO position.

Then on February 9^th Dome Duong resigned as CFO and director with AgriCann. The company said that Dome had signing authority on all banking accounts and a looming third-quarter interim financials filing deadline due February 29^th. The company said it was unable to file quarterly interim consolidated financial statements and its MD&A. It is currently under a Cease Trade Order for failure to file. AgriCann said the transition to an experienced and qualified accountant has been proceeding slowly and is now under review.

AgriCann noted that it has struggled to regain solid footing following these departures.

Cultivation pause

The shareholder letter wrote, “Given the buildup of inventory and disruptions at the leadership level, the Company is opting to shut down new cultivation for 3 months to allow for a re-assignment and rationalization of core personnel and to facilitate the processing of harvested flower and related packaging and refocus on developing sales and retail store relations. The Company anticipates significantly lower financial overhead during this period. This hiatus also provides an opportunity to complete some final repairs and installations at the facility before resuming cultivation.”

Henk Vander Waal, the company’s Master Grower, AgriCann director, and a top individual shareholder remains with the company.

AgriCann Solutions operates the wholly owned subsidiaries Craft Nurseries Canada Ltd., a full-service Health Canada-licensed cannabis nursery located in Lake Country, and Newline Ventures Inc., a Health Canada multi-licensed facility in nearby Vernon, British Columbia.