Agra Ventures exits joint venture, blames unfavorable market and regulatory conditions

Agra Ventures has exited the Propagation Services Canada joint venture by way of executing a series of agreements with its partner and related entities. Effective today, the company has settled its debt receivable and sold its equity interest in BBC to its JV partner for an aggregate of $250,000, and Nick Kuzyk, CEO and Director of AGRA has resigned as an officer and director of the JV.

Despite the Joint Venture proving to be capable of growing high-quality cannabis, the company blamed high levels of supply resulting in declining market prices, combined with high operating costs, as the main reasons why the JV wasn't profitable.

Since its inception, BBC had accumulated approximately $25 million in losses and was not expected to record net income in the foreseeable future due to unfavorable industry conditions, an onerous regulatory framework, and unattractive competitive dynamics as a Licensed Producer of cannabis in Canada, says the company.

"Continuing to lose significant amounts of money through BBC was not a viable option for AGRA or for its JV partner. Ceasing cannabis growing operations to stop the financial losses was a difficult but necessary joint decision, which is one that is also being made by management teams in other segments across the Canadian cannabis industry, even quite recently in a significant way at the retail end of the value chain," said Nick Kuzyk, Director, and CEO & Director of the Company.

“I understand that many of AGRA’s shareholders were hopeful that BBC would become a national leader in cannabis production. Unfortunately, the recreational cannabis industry has not been set up for success, and significant changes are needed to the Cannabis Act and other tax-related improvements in order for the plant-touching aspects of the industry to become economical at a reasonable scale. However, exiting the JV gives AGRA’s board of directors the opportunity to consider a new direction for the company, based on its collective areas of expertise and more attractive alternatives currently available in the market,” added Mr. Kuzyk.