Hemp production facility at former eastern Manitoba tree nursery goes bust

A startup company's planto turn atree nurseryinto a commercial hemp operation has gone bust.

The Manitoba government terminated its land lease last month with Botanist OrganicGrowers Corporation, the province confirmed on Thursday.

The company, which made no progress toward production ofhemp cannabidiol, or CBD, now owes the province $500,000.

Botanist Organic Growersbought the sprawling greenhouse facility near Hadashville, Man., about 90 kilometres east of Winnipeg, from the province in 2019 for $1.43 million. The province hadshut downoperationsat the provincially run tree nursery in 2018, saying it was losing money.

The company agreed to lease the Crown-owned land for $240,000 a year.

It aimed tohire as many as 200 people at the site of the formerPineland Forest Nursery, heralding an economic boom for the region.

But it never happened.

"Each season, it was getting more depressing," said TrudyTurchyn, the reeve of the rural municipalityof Reynolds.

"You would see the facilities, the greenhouses, everything deteriorating; weeds and trees taking over. It was very sad to see because it was such a gem and had such potential."

'Bottom fell out' of market

When the Manitoba government shut down the tree nursery, which grew seedlings for the provinceand some for export, it had 67 greenhouses onmore than 300 acres (121 hectares) of land.The province expected a search for buyers to generate significant interest.

Botanist Organic was announced as buyer in February 2019, with thecompany sayingitplanned tobecome the biggest producer in the world of organic hemp cannabidiol. CBD isa compound derived from hemp or cannabis that unlike THC the psychoactive component in cannabis doesn't get users high, and is prized forpurported health benefits, including pain relief.

However, "[the] bottom fell out of the cannabis supply market shortly after," saidJohn Pozios, a corporate finance advisor in Winnipeg. He was hired by Botanist Organicto manage issues around the Pinelandsite.

Oversupply made itimpractical to grow hemp, or potentiallycannabis, Pozios said.

The company sought alternative uses for the site. It was in talks with a number of First Nations to grow fresh produce, which would be offered toremote and northern communities where produce is expensive, he said.

The province was kept abreast of the company's plans and remainedpatient, said Pozios.

Last winter, Botanist Organic got into a dispute with Manitoba Hydro regardinggas supply to the property, which is now the subject of litigation, he said.

"That became actually a fly in the ointment. As we were trying to work through the dispute with Hydro, the province was becoming increasingly anxious that we weren't moving forward with the project."

Eventually, the province's patience ran out. Thelease was terminated with only five days' notice for the company to cover its outstanding debts, Pozios said.

He said noassets were sold, and those on the land remain the company'sproperty.

The provincial government said the company ran out of time.

"While the province entered into the agreement with Botanist Organic Growers Corp. (BOGC)in good faith and, in the interests of all Manitobans, it has become clear that BOGC isunable to fulfil its obligations," a spokespersonsaid in a statement.

The province was sympathetic to business issues during the pandemic, the statement continued, but"thecompany failedto provide an acceptable plan to move forward."

Thelease was terminated on Sept. 28 of this year.

"Manitoba owns the land and is proceeding to conclude its dealings with BOGCafter which Manitoba will be exploring new options for the site."

Produce for First Nations

Botanist Organic is hoping it can negotiate asettlement with the province regarding its overdue payments and with Manitoba Hydro concerningitslitigationand hopes to then try redeveloping the site, Poziossaid.

"We havenew investors who are interested in investing in the property as a social enterprise, growing produce forFirst Nations," he said. "There's a desperate need for more affordable, fresh produce."

Opposition NDP environment critic Lisa Naylor called on the government to partner with the municipality on next steps for the property. She feels the province was unnecessarily secretive leading up to lease's termination.

Despite numerous requests, Reynolds Reeve Turchynsaid the municipality got no information about the producer's strugglesuntil it learned of theterminated lease this month.

"Everybody is disappointed" the project isn't going through "because it was going to be an exciting new lifeline for the community," she said.

Turchynsaid she wishes the province imposed stricter timelines on the initial buyer, so the property wasn't sitting dormant for years.

Hemp production facility goes bust

3 years ago

Duration 1:38

More than a two and a half years after a hemp production facility near Hadashville, Man., was announced, the provincial government has terminated the company's lease.