Ontario Grass Company Filed for Insolvent Procedure

An Ontario-based craft cannabis company filed an official insolvent procedure, listing approximately $15.5 million in liabilities, including $2.2 million to RBC

The company, which has been cash flow negative since its inception, is currently operating at unsustainable monthly losses and has reached the limit of its revolving operating loan with RBC. In addition, the lack of brick-and-mortar stores in Ontario as a result of the COVID-19 pandemic hindered up-front sales from the Ontario Cannabis Store and led to the company needing to sell its cannabis through the wholesale market at lower margins.

Based on cash availability, the company is currently unable to pay for the testing and certification required to sell dried cannabis; pay its employees; and fund general overhead expenses of the business. Without additional funding and protection from its creditors, the company will have no choice but to immediately cease operations.

They owed approximately $5.2 million in outstanding mortgage loan principal and interest, supports the NOI proceeding and has agreed to provide up to $4.0 million in DIP financing to the company.

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