Maricann Group Inc. Provides Operational Update
TORONTO, Sept. 5, 2017— Maricann Group Inc. (CSE:MARI) ("Maricann" or the "Company") a low cost, greenhouse producer of medical cannabis with market leading technological differentiation, is providing this operational update. On March 8th, a windstorm with gale forces up to 115 kph hit the peninsula on the shores of Lake Erie near the Company’s Langton, Ontario site. An unusual event, the storm resulted in sand and foreign materials from nearby fields being blown into two of the Company’s five main flowering greenhouses.
In Canada, under Access to Cannabis for Medical Purposes Regulations (ACMPR), all aspects of cultivation must be controlled and no outside matter is permitted to enter the greenhouse unless introduced intentionally and through an approved process. Since the occurrence of the storm, the Company has spent significant time trying to determine the full consequences and impact of the storm. The Company was not immediately aware whether any contaminants had impacted the flowering areas of the greenhouses and it was not until the first harvests were completed from both affected greenhouses that the Company became aware of the remnant presence of trace sand in the trim. The Company also spent several weeks consulting experts in the field to determine whether the flower could still be used for oil production, as that process could potentially eliminate any trace amounts of contamination. The opinions received were mixed and the Company’s Quality Assurance team ultimately determined that it could not definitively state that there was no contamination in the lots that were planted following March 8, notwithstanding that the lots showed no visible contamination when harvested.
With the environment no longer sealed and thus compromised following the storm, Maricann made the decision to destroy all of the plants in the two affected greenhouses which reduced its available inventory,. During the time that inventories were low, the Company purchased limited bulk product from a reputable licensed producer, who, like Maricann, has never had a recall of product. The Company also worked with its patients’ physicians to split prescriptions to other trusted licensed producers until it was again able to supply its own product. Maricann’s shelves are now fully stocked with a wide variety of strains, and our oil inventory is fully available. Since the storm, the affected greenhouses have been steam cleaned, pressurized and inspected by Maricann’s Quality Assurance (QA) team. The Company has worked tirelessly to seal the HVAC system and install additional perimeter safeguards to ensure the greenhouses are not penetrated in the future. Maricann has commenced regular production, achieving exceptional yields of dry flower up to 79 grams per plant, per cycle.
The Company is properly insured to cover the losses in inventory. This natural weather event nevertheless had an effect on its short-term revenue stream. Late last year, Maricann tracked up to C$600,000 revenue per month. As a result of a natural weather event, revenues for the three and six month period ended June 30, 2017 were $661,602
and $1,804,769 as compared to $906,246 and $1,864,019 during the same period in 2016 and the Company has revised the forecast of revenue for 2017 from C$6.7 million to C$4.3 million. The total loss to be borne by the Company as a result of the incident is not yet determined; as it will be reduced by the not yet determined amount of the insurance recovery.
“Patient safety is our ultimate concern. We could have attempted to salvage the plants, however, there is no way to ensure that spot contamination didn’t occur,” said Ben Ward, CEO of Maricann. “Our commitment to the creation of long term shareholder value surpasses short term profits.”
“As we build for a greater future, we’re willing to take the necessary steps to ensure long term shareholder value creation, never putting our shareholders at risk, explaining the near-term ups and downs in share price – tracking to our ultimate goal,” said Ward.
The Company's financial statements and related management discussion and analysis for the period are available under the Company's profile on SEDAR at www.sedar.com. All amounts are expressed in Canadian dollars.
About Maricann Group Inc.
Maricann is a vertically integrated producer and distributor of marijuana for medical purposes. The company was founded in 2013 and is based in Toronto with a facility in Langton, Ontario, where it operates a medicinal cannabis cultivation, extraction and distribution business under federal licence from the Government of Canada. Maricann, which has federal licences to cultivate, process and distribute cannabis, services a patient base with more than 8,000 total registered patients since inception. Maricann is currently undertaking an expansion of its cultivation and support facilities in Canada in a fully funded 217,000 sq. ft. (20,159 sq. m) build out, to support existing and future patient growth.
Forward Looking Information Certain statements in this document contain forward-looking statements which can be identified by the use of forward-looking terminology such as “believes”, “expects”, “may”, “desires”, “will”, “should”, “projects”, “estimates”, “contemplates”, “anticipates”, “intends”, or any negative such as “does not believe” or other variations thereof or comparable terminology. No assurance can be given that potential future results or circumstances described in the forward-looking statements will be achieved or will occur. By their nature, these forward-looking statements, necessarily involve risks and uncertainties, including those discussed herein, that could cause actual results to significantly differ from those contemplated by these forward-looking statements. Such statements reflect the view of the Company with respect to future events, and are based on information currently available to the Company and on assumptions, which it considers reasonable. Management cautions readers that the assumptions relative to the future events, several of which are beyond Management’s control, could prove to be incorrect, given that they are subject to certain risk and uncertainties, and that actual results may differ materially from those projected. Factors which could cause results or events to differ from current expectations include, among other things: fluctuations in operating results; the impact of general economic, industry and market conditions; the ability to recruit and retain qualified employees; fluctuations in cash flow; increased levels of outstanding debt and obligations under a capital lease; expectations regarding market demand for particular products and the dependence on new product development; the impact of market change; and the impact of price and product competition. Management disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise. The reader is cautioned not to place undue reliance on forward-looking information.
VP Investor Relations
North 6th Agency
Corporate Headquarters (Canada)
Maricann Group Inc. (Toronto)
845 Harrington Court, Unit 3
Burlington Ontario L7N 3P3
European Headquarters (Germany)
Thierschstrasse 3, 80538 Munchen, Deutschland