Last Thursday, cannabis and CBD retailer Green Growth Brands (CSE: GGB) issued a news release, which focused on the news that CEO Peter Horvath would be stepping down from his role with the company, both as a director and as an executive. Near the end of the release, the company also identified that its CBD business unit will be closing down temporarily as a result of the ongoing coronavirus pandemic.
It appears that the official statements made by the company however didn’t jive with what was told to that of employees. Based on company files obtained by that of The Deep Dive from numerous former employees, this statement related to the CBD operation is “slightly” misleading.
In regards to Green Growth’s CBD operation, this is officially what the company has released to shareholders:
In response to the ongoing COVID-19 pandemic and in accordance with the recommendations of health professionals and other mall-based retailers, the Company has elected to temporarily close all of its mall-based cannabidiol (“CBD”) kiosk shops in an effort order to protect its employees and customers from unnecessary exposure to the COVID-19 virus. In connection with this action, the Company will also suspend sales under its CBD e-commerce platform.
To be fair, this appears to be what occurred, if only initially. Tuesday morning, as per sources, Green Growth Brands employees received an email notifying them that all stores would be closed effective immediately as a result of the ongoing COVID-19 global pandemic. If any shops were currently open, they were to close immediately. The measure was expected to last until at least Sunday, March 29.
That email to employees was followed up two days later however, the same day that the company indicated to investors that they had undergone a temporary closure of both in-store and online e-commerce operations as a result of the pandemic. The closure of the latter is curious, given that the majority of online retailers across North America have remained open for sales despite physical location closures.
The follow up letter detailed a much different scenario for employees. Within, it was detailed that effective immediately, effectively all employees from the firms CBD and THC business units would be terminated as a result of the firms failure to sell the unit or find additional funding in the capital markets.
“Today, we are eliminating all but a dozen support roles for the public company, this includes the entire CBD team, THC team, and many corporate roles including my role as CEO role and board member.”
With the business unit effectively eliminated, the public company would “continue efforts to restructure debt, address payables, and raise additional funds to build out the Nevada, Florida and the Massachusetts footprints.”
The company then continues to say that effectively immediately they would be indefinitely suspending the CBD business unit. Regarding the announced transaction with BRN Group, Green Growth commented that the transaction is “unlikely to close in the near term, perhaps not until the world begins to resume normalcy.”
If this weren’t enough of a kick in the pants to employees, the letter is closed out with Green Growth Brands stating, “Unfortunately, we’re not in a position to fund payroll, your termination date is official as of March 19, 2020.” The company then goes on to provide unemployment application details, and indicates that employees have 90 days to rollover their 401k funds to another account, and that their health benefits will be expiring as of March 31, 2020.
The announcement of the closure of the firms CBD kiosk wasn’t the first bad news for employees however, as the Green Market Report outlined on Friday, which is inline with what The Deep Dive’s own sources have indicated. Previously, employees had seen their last check arrive several days late, which was blamed on the payroll company, while also undergoing less than stellar working conditions.
The full text of the letter sent to Green Growth Brands employees by the company can be found below. Specific information related to obtaining unemployment insurance and the transfer of 401K accounts has bee removed for privacy reasons.
Green Growth Brands last traded at $0.08 on the CSE.
A Message from Peter Horvath, CEO of Green Growth Brands
Today we will begin a sequence of decisions and announcements around the future of the Green Growth Brands and the impact on its stakeholders.
GGB IS a startup, and the nature of startups brings with it significant value creation, as well as risk, volatility, and uncertainty.
Since forming the corporation 2 years ago, we have built our business, our brands and our teams in record time and at the highest standards in the industry. We have broadened our customer base and investor base with this work, reaching nearly 1/2 million consumers across both the THC and CBD business.
There has been much accomplished, and we all have much to be proud of, especially the capable team that first formed, then launched, then nurtured these businesses.
Together, we encountered the collapse of the capital markets for cannabis related businesses. This put incredible stress on our business. Over the past year we had interest from many other parties to acquire all, or part, of our business. Despite significant efforts on our part to support those transactions, all of those potential investors or buyers ultimately could not follow through as they also were experiencing difficult due to the collapse of cannabis capital markets.
Now virtually every business in the global economy is struggling with current events.
Like so many other businesses, we are simply unable to continue as the company we have built and must make significant changes to address our circumstances.
We have, similar to many other non-essential retailers, suspended operations of our mall-based CBD business and we are now suspending our web channel. Without revenue from the CBD business or a completed sale of it, our business simply cannot continue in its current form.
Today, we are eliminating all but a dozen support roles for the public company, this includes the entire CBD team, THC team, and many corporate roles including my role as CEO role and board member.
We still have interest from other parties to buy the CBD business, but a transaction is unlikely to close in the near term, perhaps not until the world begins to resume normalcy. When and if that happens, there may be opportunities for those who wish to rejoin the CBD business to operate it under new ownership.
Regarding the continuing public company, the remaining team will continue efforts to restructure debt, address payables, and raise additional funds to build out the Nevada, Florida, and the Massachusetts footprints.
This is a terrible time for anyone to lose their job, especially our team members. You each have fostered an exemplary workplace culture that should follow you to your next job. A recovery from the current worldwide crisis is imminent, and life will go on.
I hope that if not now, someday soon you will look back on our journey together as fondly as I do, and appreciate each other, and what we were capable of building together.
Effective immediately, GGB will be suspending indefinitely the CBD business, including both its stores and ecommerce platform.
Unfortunately, we’re not in a position to fund payroll, your termination date is official as of March 19, 2020. Health Benefits are active through March 31, 2020 and on April 1, 2020 you will have the option to move forward with COBRA insurance.
It is recommended that you apply for such benefits immediately. Please reach out to [redacted] with inquires regarding unemployment.
[Unemployment Application Details]
Information for this briefing was found via Sedar and Green Growth Brands. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.