HEXO Corp has provided additional information about licensing at its facility in Niagara, Ontario.
"In November 2018, prior to HEXO Corp’s acquisition of Newstrike Brands, the UP Cannabis cultivation facility in Niagara was licenced by Health Canada and production from that facility began shortly after," the team with the company explains. "Block B – the space in question – was included in the licence application. In October 2018, Health Canada requested additional information for the application, pertaining specifically to the building where Block B is housed. When the licence was received, the team was under the impression that Block B was included in the licence. In February 2019, Health Canada conducted an inspection of the facility, which included Block B and no observations were made about cultivation in this space. This further reinforced the assumption that it was indeed a licensed growing space."
On July 30, 2019, shortly after the Newstrike Brand Ltd. acquisition closed, HEXO discovered that cannabis was being grown in Block B, which was not adequately licensed. "HEXO management immediately ceased cultivation and production activities in the unlicensed space," they continue. "The Company notified Health Canada instantly, and the regulator was satisfied with HEXO management’s corrective actions. The Company is confident that all product cultivated and produced in all its facilities is grown according to the highest quality standards and following all standard operating procedures. As an additional quality assurance measure, HEXO’s Chief Operating Officer personally inspected and certified any shipments for sale from that facility. All of the inventory on site at that time was held from shipping and scheduled for destruction."
“Upon discovering that cannabis was being grown in an inadequately licensed area of the Niagara facility we immediately ceased all activities and notified Health Canada. While we are disappointed with what we uncovered, we assume responsibility for any issues with UP products prior to the acquisition,” said HEXO CEO and co-founder Sebastien St-Louis.
Today, the facility is no longer operational. On October 24, 2019, HEXO announced it was right-sizing its operations and winding down operations in Niagara. According to the company, UP cannabis is now grown at HEXO’s Gatineau licensed cultivation facility in Gatineau, QC, as well as in Brantford in an in-door cultivation facility, and the Company retains the ability the reinstate the Niagara facility should demand increase. On October 28, 2019, the Company announced it had received renewed licences, as well as new licences for its Belleville Centre of Excellence, for research, and for the sale of new cannabis categories.