A Chatham-based medical marijuana production company that appeared to be growing like a weed is facing a multi-million dollar debt that’s putting its future and the jobs of about 160 employees in jeopardy.

AgMedica Bioscience Inc. was just granted protection under the Companies’ Creditors Arrangement Act in court documents filed with the Ontario Superior Court of Justice on Monday, Dec. 2.

A statement of facts filed with the court on Sunday, Dec. 1, stated: “AgMedica is currently in a liquidity crisis” and requires “immediate interim financing and the protections afforded under the Companies’ Creditors Arrangement Act in order to maintain the status quo and obtain the breathing room required to pursue and implement their restructuring strategy.”

Calls and emails to AgMedica executives were not returned on Thursday.

According to the Office of the Superintendent of Bankruptcy Canada, the Companies’ Creditors Arrangement Act is a federal law that allows insolvent corporations that owe their creditors more thanf $5 million to restructure their business and financial affairs.

The statement of facts states the majority of AgMedica’s secured assets are various real property holdings located in Ontario, with three secured creditors having collectively registered mortgages against the real property in the amount of $27.2 million.

In previous news stories about the company, AgMedica appeared poised for significant growth. The company received approval from Health Canada in December 2017 for the production of cannabis leading to approval for the sale of medicinal cannabis in June 2018. A few months later, AgMedica was selected as a supplier for Ontario cannabis stores.

Earlier this year, AgMedica received a “current Good Manufacturing Practice certification,” which the company’s vice-president of investor relations and international business development said was “a step toward getting into the international market.”

In early November, AgMedica announced it had achieved a major milestone by completing its first shipment of cannabis oil into the Australian market.

On Aug. 30, AgMedica’s licence was extended to allow for 12 more growing rooms at its Riverview facility, according to the filed statement of facts. The company is not yet producing cannabis in these rooms, but the statement indicated AgMedica’s production capacity would increase to approximately 24,000 kilograms of cannabis products annually – approximately $120 million in forecasted annual revenue – once fully operational, According to the statement of facts, AgMedica and its proposed underwriters planned an initial public offering (IPO) – offering public shares in the company – in the second quarter of this year.

“However, the proposed underwriters ultimately did not proceed with the IPO on the basis that the market did not support such a transaction due to insufficient public investment in licensed producers of cannabis,” the statement of facts said..

This resulted in the company being forced to consider alternative long-term financing options.

AgMedica appeared to have its liquidity issues resolved, but that quickly changed when a prospective lender backed out of a $60-million debt refinancing package, advising it was “no longer willing to lend into the cannabis space due to prevailing market conditions,” the statement of facts said.

According to a report from the proposed monitor, filed in court on Monday, AgMedica’s liquidity issues are a result of some external factors affecting the cannabis industry as a whole, such as price competition with the illicit market, challenges with the rollout of retail models across the country, and learning curves to adjust product mix to match customer demands.

Some former AgMedica employees, who wished to remain anonymous, shared their own concerns Thursday.

These employees suggested the company grew too big, too fast and has too many people at the executive level making big money, when compared to the sales revenues.

“I just really think they kind of assumed that their product was going to be able to move quicker than it did,” said one employee. “I think once the market was flooded with all different types of product it became difficult (to operate).”

With respect to challenges being faced across the cannabis industry, one employee noted “a lot of the smart-managed companies are still surviving.”

A former employee recently learned from former co-workers the company told employees this week it is under creditor protection.

When people started being laid off recently, even in management positions, it became apparent there was a problem with the company, a former employee said.

“It really scared everybody. It put everybody in kind of a difficult position this time of year.”

eshreve@postmedia.com

@Chathamnews