- Agrima’s parent company Ascent says its "ability to continue as a going‐concern may be in doubt.”
- Agrima’s license was suspended in September for alleged “unauthorized activities with cannabis.”
- Announcement comes days after ten large shareholders transferred voting rights to a trustee.
The future of Agrima Botanicals Corp. and its parent company Ascent Industries Corp. is in jeopardy after Health Canada said it will proceed with plans to revoke Agrima’s cannabis licenses.
In September, Health Canada suspended Agrima’s ACMPR licenses and Dealer’s License due to alleged “unauthorized activities with cannabis.” The department said in November that it intended to fully revoke the licenses, but gave the Maple Ridge, B.C.-based cannabis producer time to provide “reasons why a license revocation would be unfounded.”
On Thursday, Ascent announced that Health Canada had rejected its reasons, and plans to proceed with the license revocation. The department gave Ascent and Agrima two more weeks to make final submissions. The news sent Ascent stock into free fall, plummeting more than 26 per cent on Thursday.
“Health Canada has repeated its previous position that the Company has failed to demonstrate that the suspension, and proposed revocation, of Agrima’s Licenses is unfounded, or that the failures that gave rise to the suspension were rectified,” Ascent said in a press release.
“Should the Company not be successful in its attempt to have the Licences reinstated so that it may commence operations and generate revenue and cash flow in Canada, the Company’s ability to continue as a going‐concern may be in doubt.”
A spokesperson from Health Canada said in an e-mail Thursday it “has no further information to share at this time beyond what it has already disclosed in previous communication to the public.”
Three of Ascent’s key executives, Philip Campbell, Reid Parr and James Poelzer – the company’s former CEO, COO and head of business development – resigned in November. Agrima has also laid off 30 employees – approximately 36 per cent of its Canadian staff – according to Ascent’s most recent monthly report.
The circumstances surrounding the license suspension remain hazy, as Health Canada has declined to comment on the specifics of the case. However, one of Ascent’s brands, TOKO pens (a vaporizer), has been available in the Canadian recreational grey market – despite vaporizer products not yet being legal in Canada.
Ascent says it has launched an internal investigation, including a forensic analysis the company’s records. It also hired Clarus Securities as a financial adviser in December, “to explore and evaluate a broad range of strategic alternatives to strengthen its balance sheet and maximize the value of the Company.”
The latest announcement comes a week after a group of Ascent shareholders – including Mr. Campbell, Mr. Parr and Mr. Poelzer, as well as Terry Booth, the CEO of Aurora Cannabis Inc. – signed over voting control of their shares to Drew Malcolm, another significant shareholder in the company.
Mr. Malcolm is now the voting trustee for ten other shareholders, and exercises control over 140 million shares, approximately 46 per cent of the company.
“Malcolm acquired voting control over the Shares to more effectively exercise the rights of the Concerned Shareholders with a view of obtaining more fulsome disclosure regarding the Issuer’s future business plans,” according to an Ascent press release sent out on Monday.
Health Canada has never revoked a cannabis license before. It has, however, issued suspensions. On Monday, the department said it suspended the license for Winnipeg-based Bonify Medical Cannabis, after determining the company had sold marijuana sourced from the illegal market.