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The fight between Village Farms International Inc. and Emerald Health Therapeutics Inc. over control of their joint venture Pure Sunfarms Corp. deepened on Tuesday, with Village Farms announcing that it is putting an additional $5.94-million of equity into the JV, diluting Emerald’s share of the greenhouse operation.

Village Farms said it was acquiring the additional position after Emerald failed to put $5.94-million into the JV on November 1, 2019, leading Pure Sunfarms to issue Emerald a default notice. Village Farms is also asking Pure Sunfarms to cancel $5.94-million worth of Pure Sunfarms shares that are being held in escrow for Emerald.

Emerald disputed this account. In a press release on Wednesday, Emerald called Village Farm’s announcement “inaccurate,” and said that Emerald had not been issued a default notice.

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“Village Farms claims that it has the right to acquire these shares under the [Pure Sunfarms] shareholders’ agreement. In fact, Village Farms has no such right. Despite Village Farms’ claims, Emerald continues to hold a full 50 per cent ownership interest in [Pure Sunfarms],” Emerald said in the release.

The companies have been embroiled in a dispute since the summer, when Emerald declined to buy an allotted amount of cannabis from Pure Sunfarms’ 1.1 million-square-foot greenhouse in Delta, B.C.

Emerald has a contractual obligation to buy 40 per cent of the cannabis grown in the facility at a pre-set price. If it doesn’t buy the product, Emerald has to make up the difference between the pre-set price for the allotment and the actual price the cannabis fetched on the open market, Village Farms said.

“During the quarter ended September 30, 2019, Emerald did not fulfill its purchase obligations and Pure Sunfarms sold the product on the open market to arm’s length parties at prices lower than the fixed price in the supply agreement. As a result, under the terms of the Supply Agreement, Pure Sunfarms billed Emerald for the difference which amounted to approximately $7.2-million,” Village Farms said.

Emerald is also disputing this claim. “Emerald believes that under the terms of the Supply Agreement, due to the manner in which the Joint Venture conducted its recent cannabis sales, it does not have a liability to the Joint Venture,” Emerald said in a news release in October.

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