Sunniva (OTCMKTS: SNNVF), a Canadian cannabis company announced the closing of wholly-owned subsidiary Full-Scale Distributors, LLC set to take place in February 2020.
“The closing of FSD is a necessary step that will eliminate the cash outlay required to operate that business,” said Dr. Anthony Holler, Chairman & CEO of Sunniva Inc. “We continue to focus on the preservation of our available funds to allow us to actively defend Sunniva’s rights under the previously disclosed dispute related to the Build to Suit Lease of the Cathedral City Glasshouse.”
Cannabis companies that are strapped for cash not have the option of filing for bankruptcy. According to bankrupt stock expert, Rick Szambel, “Currently under U.S. Bankruptcy Law companies that are engaged in a business or product not legal under Federal Law may not use the U.S. Bankruptcy Code for protection in reorganizing their debt or centralize their assets for sale. Federal Law considers marijuana an illegal substance and U.S. Trustee who is part of the Department of Justice has aggressively blocked companies in the marijuana industry, employees, and even landlords from filing Chapter 7 or 11, often forcing companies to wind down at a state level.”
This is not the first time the company has been in hot water. Last year, the company and one of its subsidiaries were named in a lawsuit for failure to repay a loan. Green Market Report previously reported “Sunniva, through its subsidiary 116, entered into a $3.4 million mortgage to finance the purchase of land for the greenhouse facility in Okanagan Falls, British Columbia,” according to the company’s November financial statement. Also included in the statement was the acknowledgment the company had paid $400,000 of their loan as of September 30th, 2019 but they were in default on the remaining balance. The company’s stock also fell significantly in November following the resignation of its CFO and president.
Written by Kaitlin Domangue