Hexo Sells Niagara Cannabis Facility For C$10.25 Mln

(RTTNews) - Canada-based cannabis company Hexo Corp. said Thursday that it has completed the previously disclosed sale of its Niagara, Ontario cultivation facility for proceeds of about C$10.25 million. The sale of the Niagara facility includes land and greenhouse facilities, as well as certain equipment.

Hexo decided to sell the facility following a strategic review of its cultivation assets in March 2020. At that time, the company determined it no longer expected to restart operations at the Niagara facility due to an excess of cultivation capacity in the market and estimated forecast demand for cannabis products because of slower than expected market development.

Hexo said it expects to use the proceeds from the sale of the Niagara facility to fund additional expansion of its Belleville, Ontario facility as well as for working capital and other general corporate purposes.

Hexo is a consumer packaged goods cannabis company. The company serves the Canadian adult-use markets under its HEXO Cannabis as well as Up Cannabis brands, and the medical marijuana market under HEXO medical cannabis.

In early June, Hexo said its cannabis manufacturing and processing facility in Belleville received a Health Canada licence amendment for the sale of dried and fresh cannabis, cannabis extracts, cannabis topicals and edible cannabis products.

Other Canadian cannabis companies too have recently closed or sold their licensed cannabis greenhouses after spending excessively on cultivation space in previous years.

In March, Canopy Growth Corp. announced plans to close two greenhouses in Canada, resulting in the elimination of about 500 jobs. The company also abandoned plans for a third greenhouse, saying that the actions are to "align" the company's cannabis cultivation capacity with projected demand.

In May, Aurora Cannabis sold its greenhouse in Exeter, Ontario, reportedly at a discount.

Tilray too announced in May that it will close its High Park Gardens greenhouse in Ontario. The High Park Gardens facility contains 406,000 square feet of Health Canada licensed space for cannabis cultivation and manufacturing.

The Green Dutchman Holdings said in March it has postponed the start up of its Valleyfield greenhouse facility, saying that the move was part of its efforts to cut costs due to market conditions. The company added it temporarily laid off the majority of its Valleyfield employees and intends to restart operations there later in the year.