The ongoing clash between two Canadian cannabis companies heats up after a dispute has broken over the ownership of a joint venture (JV).

On Tuesday (November 26), Village Farms International (NASDAQ:VFF,TSX:VFF) confirmed it had secured a majority stake in Pure Sunfarms, the 50/50 JV originally founded with cannabis producer Emerald Health Therapeutics (TSXV:EMH,OTCQX:EMHTF).

Village Farms claims since Emerald failed to pay a C$5.9 million payment to Pure Sunfarms earlier this month, Village Farms ponied up an additional equity contribution on November 19, thus increasing its stake in the JV.

Shares of Emerald fell 4.8 percent over the trading day on Tuesday and prices sit at C$0.40 as of 1:06 p.m. EST. Village Farms fared much better on the open market with an increase of 5.9 percent to C$8.80 as of 1:15 p.m. EST.

Emerald was to pay C$5.9 million to Pure Sunfarms by November 1, according to the firm, after which Pure Sunfarms sent a default notice to Emerald. Village Farms first notified investors about the default on November 19.

The news wasn’t well received by Emerald, which then fired back at its partner in a press release sent out on November 20, saying that, in fact, it still held its remaining 50 percent stake in the JV and that Village Farms didn’t have the right to acquire additional shares of Pure Sunfarms under the shareholder agreement.

Riaz Bandali, Emerald CEO, said in the November 20 statement he was shocked to learn of Village Farms’ equity contribution.

“We can’t speculate on Village Farms’ motivation for making this irresponsible and inaccurate claim, but we want to reassure investors that there has been no change in ownership of (Pure Sunfarms),” he said. “We are disappointed at the aggressive approach of Village Farms in this matter; however, we continue to believe that cooler heads will prevail.”

According to Emerald, the only case where Village Farms can take on more of its share of the JV is when Emerald defaults on a contribution notice from Pure Sunfarms. No such notice was issued, the company claims, meaning that Emerald is in the clear.

Village Farms doesn’t see it that way and said Emerald’s release was based on “a material misunderstanding of the relevant legal agreements,” adding that Pure Sunfarms confirmed the Village Farms equity contribution to the JV has been credited to Village Farms under the terms of its shareholder agreement.

Village Farms also noted it was seeking the cancellation of 5.94 million common shares of Pure Sunfarms, shares that were originally placed in escrow as a result of Emerald’s defaulted payment.

Emerald will come away with a reduced stake in Pure Sunfarms once an arbitrator gives the share cancellation the green light, Village Farms said.

Emerald took issue with the matter of escrowed shares as well, saying that it had first agreed to advance C$25 million to Pure Sunfarms and certain shares of the JV were to be released once Emerald paid off the amounts it owed as a part of the Delta 2 facility option agreement.

Of the C$25 million owed, Emerald said it had already paid C$17.41 million to Pure Sunfarms but decided to set off C$5.94 million using a portion of a C$13 million debt Pure Sunfarms needed to pay to Emerald under their principal amount shareholder loan.

Emerald took the fight to Pure Sunfarms as well after it billed the JV for the C$13 million loan — with interest — on November 20.

Neither Emerald nor Village Farms responded to a request for comment.

Emerald and Village Farms deal with ongoing conflict over JV

The evenly split JV agreement between Village Farms and Emerald dates back to 2017 when the pair said they would be teaming up to create a company with the goal of being the lowest-cost cannabis producer in Canada.

Village Farms initially put up a 1.1 million square foot greenhouse as a part of the deal. Emerald, for its part, initially contributed a total of C$20 million in cash — C$18 million of which was given out with the satisfaction of certain milestones.

Emerald then signed a supply agreement with the JV, which would become Pure Sunfarms, in 2018. The agreement stated Emerald would purchase 40 percent of Pure Sunfarms’ production in 2018 and 2019 at a predetermined price-per-gram of cannabis.

The supply agreement was at the core of the first rumblings of the dispute that started in October. Village Farms told investors Emerald wouldn’t pay an approximately C$7 million for a “price deficiency obligation” fee, which Pure Sunfarms said it was owed from Emerald.

The supply agreement states that, though Emerald agreed to buy 40 percent of Pure Sunfarms’ production, in the instance when it doesn’t Pure Sunfarms is free to sell the product on the open market instead.

As part of the deal, Emerald is required to pay the JV the difference between the predetermined price of marijuana and the market price if the market price is lower than the originally agreed-upon price, allowing Pure Sunfarms to cover its operating costs.

Emerald, however, hit back in its own statement saying that it was not liable for the payment “due to the manner in which the Joint Venture conducted its recent cannabis sales” and was well within its right to reject the product from Pure Sunfarms.

The dispute was set to be discussed in a meeting of the board of directors for Pure Sunfarms sometime after the release of the update.

Don’t forget to follow us @INN_Cannabis for real-time news updates!

Securities Disclosure: I, Danielle Edwards, hold no direct investment interest in any company mentioned in this article.

Trulieve to donate $20,000 in scholarship funding and $15,000 to support leadership development

Trulieve Cannabis Corp . (CSE: TRUL) (OTC: TCNNF), a leading and top-performing cannabis company in the United States today announced a new partnership with the Thurgood Marshall College Fund (TMCF), the nation’s largest organization exclusively representing the Black College Community. Trulieve will donate $20,000 to help fund several college scholarships awarded to students who are attending one of the organization’s member-schools as part of Trulieve’s diversity, equity, and inclusion initiatives. The $15,000 in talent funding is earmarked to support TMCF’s internship program, reaching a diverse talent pool of students and alumni from their 47 member-schools to provide immersive experiences at Trulieve.

Keep reading... Show less

The new dispensary expands patient access to Florida’s largest inventory of medical cannabis products

Trulieve Cannabis Corp. (CSE: TRUL) (OTCQX: TCNNF) (“Trulieve” or “the Company”), a leading and top-performing cannabis company based in the United States announced today the opening of a brand-new Florida dispensary, the Company’s 80th nationwide. The new location marks the Company’s first in Tamarac and third in Broward County expanding patient access to Florida’s largest and broadest assortment of high-quality medical cannabis products.

Keep reading... Show less

Revive Therapeutics Ltd. (“Revive” or the “Company”) (CSE: RVV, USA: RVVTF), a specialty life sciences company focused on the research and development of therapeutics for medical needs and rare disorders, is pleased to announce an update on the Company’s U.S. Food & Drug Administration (“FDA”) Phase 3 clinical trial (the “Study”) to evaluate the safety and efficacy of Bucillamine in patients with mild to moderate COVID-19.

With its recent $23 million dollar financing, the Company plans to aggressively expand from 14 clinical sites to up to 50 clinical sites to meet the next enrollment goals for the Study in Q2-2020. The Study is a randomized, double-blinded, placebo-controlled trial and the safety and efficacy data analyzed at each interim analysis timepoint of 210, 400, 600 and 800 completed patients are only made available to the Independent Data and Safety Monitoring Board (“DSMB”) for review and recommendations on continuation, stopping or changes to the conduct of the Study. In the event of any serious safety concerns, the DSMB would be notified to determine any risks and provide its recommendations. To date, in this initial 210 interim point there have been no serious safety concerns that required the DSMB to be notified.

Keep reading... Show less

HempFusion Wellness Inc. (TSX:CBD.U) (OTCQX:CBDHF) (FWB:8OO) (“HempFusion” or the “Company”), a leading health and wellness CBD company utilizing the power of whole-food hemp nutrition, is pleased to announce that its common shares have been approved for DTC full-service eligibility in the United States by the Depository Trust Company (“DTC”) and can now be both traded and serviced through DTC’s electronic book-entry system.

DTC is a subsidiary of the Depository Trust & Clearing Corp. (“DTCC”) that provides clearing and settlement services for the financial markets and settles the majority of securities transactions in the United States. This electronic method of clearing securities speeds up the receipt of stock and cash and thus accelerates the settlement process for investors and brokers, enabling the stock to be traded over a much wider selection of brokerage firms.

Keep reading... Show less

CFN Enterprises Inc. (OTCQB: CNFN) (CFN Media) partners with FMW Media Works LLC to produce a regular series on the global cannabis markets to air on major financial news networks across the US. Initial segment features leading cannabis analyst and US Multi-State Operator (MSO)

CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the leading media network dedicated to the global legal cannabis, CBD and psychedelics industries, today announced that its inaugural news segment on the cannabis markets, “Cannabis Market Outlook for 2021,” will air on Bloomberg, Newsmax and Fox Business.

Keep reading... Show less