TORONTO - Medical cannabis company Maricann Group Inc.'s chairman and a board director have stepped down and its recent $70 million financing is in limbo as Canada's biggest securities regulator conducts a review of certain trades by its directors.
The announcements Wednesday sent shares of the company, which produces and distributes medical marijuana, down as much as 30 per cent on the Canadian Securities Exchange to $1.70 per share from Tuesday's closing price of $2.49.
Maricann has not received an official notice of termination for the bought-deal offering announced last month, but said it has been advised orally by the underwriters that they are not prepared to proceed.
The company, based in Toronto and Munich, also announced that its chairman Neil Tabatznik and Raymond Stone, a director, have resigned from the company's board. Paul Pathak has been appointed interim chairman.
The moves come as Maricann says the Ontario Securities Commission is reviewing the timing and reporting of certain trades of shares owned or controlled by Stone and Tabatznik and Eric Silver.
It added that the regulator has also told the company in a letter dated Feb. 8 that Maricann chief executive Ben Ward is the subject of an investigation into his activities while he was CEO of Canadian Cannabis Corp., a wholly unrelated company.
"Prior to this, the company was unaware of the matter," Maricann said in a statement Wednesday. "The company is unaware of any facts that could reasonably lead it to conclude that this investigation has had, or will have, any impact on the ability of Mr. Ward to properly and effectively carry out his duties as CEO or director of the company."
According to insider trading records, Tabatznik on Jan. 23 sold 412,000 shares he indirectly owned through Copper Lake Investments Inc. at roughly $4.16 each or a total of $1.714 million. A day later, Tabatznik sold 438,000 shares at roughly $4.26 each, or a total $1.864 million. And on Jan. 25, he sold another 5,000 shares for $4.25 each, or $21,250.
Stone also sold shares he indirectly owned, through either Felicity Stone or R & FS Investments Inc., in January. On Jan. 22, records show he sold 915,837 shares for roughly $4.22 each or $3.87 million. A day later, he sold 104,421 shares at $4.20 each, and another 128,000 for $4.22 each, or a total of $978,728.
Maricann's shares were trading at $1.91 late Wednesday afternoon.
Maricann, which was founded in 2013, has production facilities in both Langton, Ont. and Dresden, Germany. On Jan. 24, the company announced a proposed acquisition of all outstanding shares of Haxxon AG, a cultivator of female hemp cannabis flowers based in Regensdorf, Switzerland. The deal, which was targeted to close on March 30, would allow Maricann to produce cannabis flowers in Switzerland that would then be manufactured into products such as cannabis vape cartridges, the company said at the time.
It has also been ramping up production capacity at home, as Canada moves to legalize marijuana for recreational use later this year, currently expanding its cultivation and support facilities in Canada to 87,515 square metres. When complete, Maricann's facility is expected to produce 95,000 kilograms of dry cannabis flower per year, the company says.
Maricann said Wednesday that OSC staff have advised that they are unable to provide any further information at this time. It added that Stone, Tabatznik, Silver and Ward have advised Maricann that they are fully co-operating with the investigation.
An OSC spokeswoman said Wednesday that the regulator has an active investigation, and is not in a position to comment further.
Maricann's board of directors has established a special committee that has full authority to review these trades and the OSC investigation involving Ward.
“We have heard from many significant shareholders of the company about their concerns with these matters, and we share them," said Pathak, speaking on behalf of the committee. "In these circumstances, we appreciate Messrs. Stone and Tabatznik having resigned. The special committee’s review is ongoing, but we are committed to providing the stakeholders of the company with a further update on its review shortly.”
Companies in this story: (CSE:MARI)