Times are tough in the cannabis industry in Quebec, as The newspaper was able to list a dozen companies that have gone bankrupt or are in serious financial difficulties, including the last on the list, the Fuga Group, of Stoneham-et-Tewkesbury, in the National Capital.
In Quebec, there have been six commercial bankruptcies in the cannabis production and processing market since 2021, including four last year alone.
Some bankruptcies are resounding like that of Zenabis in Montreal ($114 million) or Navaya in Boisbriand ($35 million) (see table). This is without counting the ten companies which are the subject of a legal construction hypothec because they have still not paid their suppliers.
- Listen to the press review commented by Alexandre Dubé via QUB:
The problem currently encountered by companies is linked to a lack of liquidity, according to Pierre Leclerc, president and CEO of the Association québécoise de l’industrie du cannabis (AQIC).
“This is a phenomenon that we saw emerge earlier last year in the West of the country and in Ontario. We thought that Quebec would be spared because we arrived a little late. Unfortunately, we are not. There are a significant number of businesses currently experiencing financial difficulties,” he admitted.
Photo Stevens LeBlanc
Black market competition
According to Mr. Leclerc, it is extremely difficult to sell products at a profit at the moment due to competition on the black market and the tax burden imposed on producers.
“As soon as we say the word cannabis, we are excluded from any government measure and program. Which means that the money injected into the system comes 100 percent from private capital.”
Several companies are public, but in Quebec, the vast majority of companies in the field are private, he says.
“So they are not able to finance themselves. They don’t have a line of credit. They don’t have loans. They do not have mortgages on the buildings. Everything is paid with equity. So, you see the burden for businesses when they are not able to have banking facilities to compensate for the fluctuations they encounter,” he explained.
Producers also criticize the rigidity of the distribution system of the Société québécoise du cannabis, with whom they do business.
“Real life is, if in six months there’s another call for product and you’re downgraded, you’re not selling anything to anyone anymore. There are no continuous supply contracts.”
There are approximately 75 active cannabis producers in the province, according to Mr. Leclerc. The industry, which is nascent, does not lose hope of seeing things improve. The export market looks promising and we are confident that the development of new sectors will eventually produce concrete results.
Debts for the Fuga Group
Among the companies in difficulty, the Fuga Group is drowning in debts of $3 million and has therefore filed a notice of intention to make a proposal to its creditors under the Bankruptcy and Insolvency Act.
The newspaper was able to contact its president, Philippe Laperrière. The latter declined our interview request. However, he suggested that he was working on a revival.
“We are focused on relaunching the company and making a proposal to the creditors,” he said.
Groupe Fuga’s notice of intent was registered on January 30, which gives the company 30 days to prepare a proposal, while being protected from its creditors. This period could be extended by the court.
–With the collaboration of Philippe Langlois
Tough times for cannabis businesses
Since 2020, many cannabis companies have experienced financial difficulties.
Here is the list:
2023: 9327-2359 Quebec inc. (Montreal-East) $282,714
2023: 9477-5632 Québec inc. “ZENABIS ®” (Montreal) $114,671,231
2023: AMDJ-Canna inc. (Amos) $2,282,630
2023: Navaya inc. (Boisbriand) $35,906,696
2021: Bo Star Holdings inc. (Montreal) $899,127
2021: Laboratoire Artémix inc. (Notre-Dame-des-Prairies) $94,172
2024: Groupe Fuga inc. (Stoneham-et-Tewkesbury) $3,018,197
2020: Tidal Health Solutions Ltd (Montreal) $17,753,510
2023: Gelcan Company inc. (Pointe-Claire) $26,744,722
2022: MYM Nutraceuticals inc (Vancouver) and
Trichome JWC Acquisition Corp. & Als. (Toronto) * $70,339,814
2022: Zenabis Ltd. “ZENABIS ®” & Als. $128,500,000
2023: Corporation Terranueva (L’Assomption) $10,131,920
* Both entities are linked by the same folder
Source: iTerram Technologies Inc. (Terram.io)