Acquisitions, investments, and facility construction deals have been announced regularly in the months since Canadian cannabis legalization, but not all of those deals have reached satisfactory conclusions for the involved parties.
Today, Ontario-based Auxly Cannabis Group Inc. (TSX.V: XLY) officially terminated the company’s prior agreement with FSD Pharma Inc. (CSE: HUGE).
That nixed joint venture originally saw the companies teaming up to work on the next phase of construction for an FSD Pharma cultivation facility located in Cobourg, Ontario. Auxly Cannabis had invested $7.5 million into the construction project prior to the venture’s termination.
After announcing the deal’s demise, Auxly issued this statement regarding the decision to cancel the venture this week:
Auxly further stated that notice was sent to FSD Pharma in January regarding the specifics of those breaches, but that the companies decided to terminate the agreement rather than seek to resolve the contractual issues.
The deal’s termination arrives in the midst of a major restructuring at FSD Pharma. Prior to the announcement, FSD Pharma’s board of directors fired Chief Executive Officer Rupert Haynes and appointed co-chairman Dr. Raza Bokhari as interim CEO while a permanent replacement is sought.
Regarding the sudden management change and joint venture cancellation, Bokhari had this to say:
Upper management shakeups have been fairly common in the newly legalized industry over these past three months as cannabis companies find their footing in a changed economic and political landscape.
Both Bonify and Namaste Technologies (TSXV: N) recently ousted their CEOs over allegations of misconduct, while Vic Neufeld of Aphria (TSX: APHA) has also stated he will be stepping down later this year.