Maricann (CSE:MARI) faced a significant decline in the market on Tuesday (September 5) after it announced it was forced to burn down product from two greenhouse facilities and as a result reduce their sales expectations.
The company explained a windstorm affected two of its five greenhouse facilities in their Langton, Ontario site. The storm, which according to the Insurance Bureau of Canada cost almost $100 million in insured damage, hit the company’s site with winds of 115 kilometres per hour. This caused the two facilities to admit “sand and foreign materials,” a direct violation of the regiment put forth by Health Canada in the growth of legal cannabis.
The market responded negatively to Maricann’s announcement. The company’s stock closed the trading day on Tuesday valued at $1.13 after facing a 6.61 percent decline.
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According to Maricann they were “not immediately aware” of any of these foreign elements had caused an impact on their flowering areas inside the greenhouse.
“[I]t was not until the first harvests were completed from both affected greenhouses that [we] became aware of the remnant presence of trace sand in the trim,” the company disclosed in a corporate update to shareholders.
In response to the sand damage and after consulting with undisclosed “experts in the field” alongside their quality assurance division, Maricann couldn’t determine if the product was safe from contamination. The company ended up destroying all the product from the two affected greenhouses.
“We could have attempted to salvage the plants, however, there is no way to ensure that spot contamination didn’t occur,” Ben Ward, CEO of Maricann said in a statement.
This loss caused Maricann to purchase bulk product from another LP, which the company failed to name in their announcement, but said had not suffered a recall of any type.
The company claimed to have repaired and sealed the facilities following and the damage and that production there has been returned to normal.
Due to the elimination of the damaged product, Maricann has reevaluated their revenue estimates for the year from $6.7 million down to $4.3 million.
“The total loss to be borne by the Company as a result of the incident is not yet determined; as it will be reduced by the not yet determined amount of the insurance recovery,” the company added.
The company also announced on Tuesday it had obtained a second license for their location in Burlington, Ontario.
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Editor’s note: This article has been updated as of September 6, 2017 to remove information cited as speculation only.
Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.