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On Monday, Canadian-based Emerald Health Therapeutics, Inc. (CSE: EMH) (OTCQB: EMHTF)  reported its financial results for the year ended December 31, 2021, and gave an update on its plans to exit the cannabis industry. Total revenue for Emerald Health in 2021 fell to C$11.8 million from last year’s C$14.2 million.

In 2021, the company stated that it planned to sell off its cannabis properties and focus on pharmaceutical development. The company hired Vantage Point Advisors to see which companies would be interested in a strategic merger to help the transition from the recreational and medical cannabis business.

Emerald said that after reviewing several companies it decided to go with Skye Bioscience Inc (OTC: SKYE). Skye will issue the company’s shareholders 1.95 shares of Skye’s common stock in exchange for each company share. Skye is a San Diego-based pharmaceutical company developing proprietary, synthetic cannabinoid derivatives to treat glaucoma and other diseases with significant unmet needs.

Cannabis Exit

Emerald said that its Victoria, BC operation, the lease on one of its facilities expired on February 28, 2022, and the lease for the remaining facility expired on May 31, 2022. The company continues to rent both facilities on a month-to-month basis in order to maintain its Health Canada-issued license under the Cannabis Act to produce and sell cannabis products. The company said it has fully wound down all operations at the Victoria facilities as of June 1, 2022. Emerald is pursuing the sale of its licenses, brands and processing equipment in relation to its Victoria locations.

At its St. Eustache, QC operation, growing, and processing of cannabis continued until June 30, 2022. In the first quarter of 2022, the company said it retained agents to assist in the sale of the cannabis production operation as a continuing operation. The company has not yet entered into a binding sale agreement with respect to this facility and the selling process is ongoing. Throughout the discontinuation process, the company retained its cannabis sales agreements with the various provinces and continued to sell newly produced and inventoried cannabis dried flower and oils at a reduced volume until June 30, 2022.

On April 14, 2022, the company entered into an agreement with the landlord for its Metro Vancouver greenhouse facility under which the lease obligation related to the facility, which extends to 2047, would be terminated effective December 31, 2022, in exchange for transfer to the landlord of the non-leased equipment owned by the company at the site facility. The Company also has an option to terminate early. On April 28, 2022, the company entered into an amending agreement with FlowerPod LLC, amending the December 28, 2021, binding term sheet payment schedule to $0.75 million on closing and a $0.75 million promissory note bearing 10% interest per annum. The company continues to retain the two-year interest-bearing promissory note issued by FlowerPod on May 6, 2021, in the amount of $0.35 million.

 

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