Wayland Group Cancels Transaction with ICC International Cannabis Corp, Blames Health Canada for Construction Delays

Wayland Group (CSE: WAYL) issued a corporate update this evening, identifying that it has terminated the sale of its international assets to that of ICC International Cannabis Corp (CSE: WRLD.u). No reason was provided for the cancellation of the sale.

The transaction between Wayland and ICC was originally announced earlier this year, with ICC to purchase 49.9% of effectively all of Wayland’s international assets. The transaction was to be in the form of all-stock, with Wayland receiving 300,000,000 shares of International Cannabis which were then to be distributed to Wayland shareholders. The total distribution was to be equal to 41.7% of ICC’s outstanding shares at the time of announcement.

Certain asset transfers had been completed as long ago as May between ICC and Wayland, with the Canadian producer currently holding a 37% interest in ICC. Those shares however will now be cancelled, and the assets returned to Wayland as a result of the termination. It’s unclear whether certain defined cash advances between the two firms had occurred, and if so, whether they’ll be reversed.

In addition to the termination of the partial sale of Wayland’s international assets, the firm provided an update on domestic operations. The Langton, Ontario facility and associated sale is still moving forward with Cryptologic, however no new details were provided. Discussions remain ongoing between the two firms in relation to the all-stock transaction.

in terms of construction, Wayland provided an update to investors, indicating that phase 1A still has yet to be completed. The firm blamed Health Canada and its slow process of regulatory approvals for its construction delays. This claim however makes little sense, as no regulatory approvals are required during the construction process itself – licensing occurs once construction is completed. In the case of an amendment, the application for amendment is submitted after construction is complete.

Like many companies in the cannabis industry, the Company experienced unanticipated regulatory delays in obtaining amendments to its licenses. The delays in respect of amendments relating to the Langton facility contributed to additional financial challenges for the Company. These factors were the primary cause of the construction delays in completing the construction of this phase of construction at the facility, which was previously expected to be completed earlier this year.

Wayland Group, October 31, 2019 press release.

As a result of Wayland’s failure to complete the construction of its facility in a timely manner, revenue expectations have been severely reduced by the firm. Original estimates of $37.9 million for 2019 are now estimated to be reduced to only 15-30% of that figure, placing guidance at roughly $5.7 – $11.4 million.

Wayland estimates that upon completion of all four parts of phase 1 construction, the Langton, Ontario facility will be capable of producing 25,000 kilograms of dried cannabis per annum.

Wayland Group remains halted on the CSE as a result of the firm failing to file financial statements.

Information for this analysis was found via Sedar and Wayland Group. 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.