London cannabis company Indiva granted creditor protection

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A London-based cannabis company has been granted creditor protection and plans to sell the business amid wide-spread turmoil in the marijuana industry.

Indiva, the leading maker of cannabis-infused edibles in Canada, is the latest Southwestern Ontario pot producer to seek relief under bankruptcy protection laws as it deals with mounting debt. The company revealed in April it had accumulated debt of $71.6 million, according to MJ Biz Daily, a cannabis industry publication.

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Indiva announced it has been granted creditor protection this month, which it says gives the company the “time and stability” to consider potential restructuring deals including the sale of the business and its assets.

“Due to, among other things, the fragmentation of the cannabis industry, financial underperformance and pressures resulting from obligations owing to creditors, the Indiva Group has incurred cumulative losses,” the company said in a statement, noting the process won’t affect its operations.

Indiva will seek court approval to sell its business and assets to Alberta-based cannabis and liquor retailer SNDL Inc., an existing creditor and one of its larger stakeholders.

“It is expected that the Indiva Group will emerge from creditor protection as a stronger company with a healthier balance sheet,” the company said.

Indiva and company chief executive Niel Marotta didn’t respond to a request for comment Friday.

A publicly-traded company on the TSC Venture Exchange, Indiva operates a 3,700-square-metre (40,000-square-feet) plant on Hargrieve Road in south London, where it makes and packages cannabis-infused edibles and extracts.

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After Canada became the second country in the world to legalize recreational marijuana in 2018, pot producers raced to expand their growing capacity – building greenhouses, outdoor farms and indoor facilities – while Indiva focused on edibles, even though the products were not approved for sale until a year later.

The move initially appeared to pay off when provinces struggled to open enough retail stores and compete with the black market on price and product selection, leading to industry-wide layoffs and slumping stock prices. Indiva stopped growing cannabis at its south London plant, where more than 160 people worked at its peak, in 2021 and converted its cultivation rooms into spaces for making and packaging edibles such a chocolates, cookies and gummies.

Indiva’s financial struggle is the latest blow to the cannabis industry in Southwestern Ontario, a region that was once home to more than a dozen licensed pot growers that employed more than 2,300 workers. The region’s proximity to 400-series highways, an abundance of affordable commercial space and greenhouses, a large labour pool and some of the country’s best farming conditions helped it carve out a niche as Canada’s cannabis belt.

In 2022, Strathroy-based Eve and Co., a female-focused cannabis company, was granted creditor protection. The same year, Entourage Health, formerly WeedMD, closed its indoor growing facilities in Strathroy and Guelph, eliminating roughly 90 jobs, as it shifted away from growing cannabis.

dcarruthers@postmedia.com

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