The Ontario Superior Court of Justice has approved an initial application for Kitchener cannabis company James E. Wagner Cultivation to receive creditor protection.

The company announced last week it was restructuring and seeking creditor protection.

Trichome Financial is giving JWC up to $4-million in financing as part of a debtor in possession loan. It's also planning to purchase JWC's assets, according to James E. Wagner Cultivation.

"As a result of the DIP loan, it is expected that day-to-day obligations to employees, key suppliers of goods and services and JWC's customers payable, from and after the filing date, will continue to be met," said a company news release.

CBC News requested an interview with the JWC, but the company declined to comment.

'Enormous impact'

Daniel Safayeni, co-chair of the Ontario Cannabis Policy Council, says COVID-19 has had an "enormous impact on the [cannabis] industry."

"Ontario's cannabis industry has weathered considerable shocks even up to this point, and COVID-19 has added another significant impact in respect to suppliers and workforce and retailers' ability to keep their operations open," said Safayeni.

He says measures such as newly announced Business Development Bank of Canada credit will help the sector rebound.

"This is an emerging industry that has grown fairly rapidly over the last 18 months, and this is going to be a critical time for all the cannabis industry to ensure measures are taken that allows industry players to come out on the other side of this," said Safayeni.

In the fall, JWC broke into the recreational cannabis market and doubled its production capacity to 23,000 square feet. The company was the first in Waterloo region to receive its license from Health Canada to produce medical marijuana in 2017.