Canadian cannabinoid company MediPharm Labs Corp. said it has sold its Napanee, Ontario manufacturing facility to Kensana Health, a biotechnology firm specializing in phytopharmaceuticals, for roughly $4 million (CA$5.5 million) in cash.
The transaction, expected to close by Jan. 1, 2025, includes the sale of MediPharm’s subsidiary ABcann Medicinals, which owns the building, land, equipment, and associated business license.
Both companies make CBD and medical-grade THC products. The MediPharm Ontario facility produces pharma-grade CBD and THC concentrates, active pharmaceutical ingredients, and derivative products, including oils, soft chews, capsules, and vapes, primarily for the medical market.
Supplier deal
A strategic partnership formed alongside the sale will see Kensana Health as a key supplier of products and services to support MediPharm’s international brands and customer base.
MediPharm CEO David Pidduck said the deal reflects the company’s strategy to streamline operations by monetizing non-core assets while also securing a strategic supply and services agreement.
The Napanee facility received Good Manufacturing Practices (GMP) certification from Brazil’s National Sanitary Surveillance Agency earlier this year
Kensana Health, based in Ontario, Canada, is a biotechnology and plant-based medicine producer. It said acquisition of the Napanee facility supports its ongoing U.S. Food and Drug Administration (FDA) registration process for a topical chronic wound treatment.
Looking abroad
Kensana said it plans to pursue regulatory approvals in Europe, the UK, Canada, the Middle East, the Pacific Rim, and Australia.
MediPharm continues to struggle with declining revenues and mounting losses that have bedeviled the entire CBD sector over the past few years. The company reported net revenue of $9.8 million for Q3 2024, with a gross profit of $3.1 million but a net loss of $2.8 million. Revenue increased by 15% compared to $8.5 million in Q3 2023, while the net loss improved from $4.3 million.
The majority of Q3 revenue came from the Canadian market ($6.2 million), up from $5.9 million in the same quarter last year. Other sales included $2.5 million in Australia (up from $2.2 million), and $1 million in Germany (up from $319,000).
The company reported revenues of $20.66 million in 2023, after posting $23.01 million in 2022 and $26.39 million in 2021. Losses in those years were $21.77 million, $19.07 million, and $15.63 million, respectively.
Founded in 2015, Barrie, Ontario-based MediPharm makes pharmaceutical-quality cannabis concentrates, active pharmaceutical ingredients (APIs), and advanced derivative products.
MediPharm’s product portfolio includes CBD isolates, formulated oils, soft chews, capsules, and vapes, sold on domestic and international medical markets. It owns the VIVO Cannabis Inc., medical cannabis e-commerce platforms and said it has international operations in Australia and Germany.
Kensana Health, a private Canadian company, develops proprietary and patent-protected phytopharmaceutical formulations.
Dismal share price
MediPharm’s stock, traded on the Toronto Stock Exchange, is currently at CAD$0.23 (23 Canadian cents). The stock’s historical high was CAD$5.00 in 2019.
MediPharm is struggling to right itself after the CBD market was plagued by oversupply, regulatory uncertainty, and falling consumer confidence, conditions that have killed off many CBD companies.
A rush to cultivate hemp flowers for CBD led to a glut of raw materials, causing prices to plummet and making it hard for producers to stay profitable. Meanwhile, the lack of clear, consistent regulations, especially in the U.S., created confusion for businesses navigating a complex legal landscape. This, combined with limited scientific evidence to back the health claims of CBD, led to consumer skepticism and restrained demand. As the market became saturated with competing brands, many businesses lacked the resources to survive, leading to a wave of closures and bankruptcies. Investor confidence also waned as the broader cannabis sector slowed, making it harder for CBD companies to secure necessary capital.
Additionally, many companies struggled to diversify their products beyond oils and tinctures, further limiting their ability to stand out in a crowded market.
All cannabis hit
The medical marijuana business has also experienced softness in recent years due to regulatory challenges, price pressures from oversupply, and slower-than-expected patient growth. Many markets, particularly in Canada and the U.S., have seen a shift of patients toward recreational cannabis while market saturation and intense competition have made it harder for companies to differentiate and maintain profitability.
The recent sale is only the latest by MediPharm Labs in the company’s ongoing effort to streamline its operations.
In 2024, the company sold its Canna Farms facility in Hope, British Columbia, following its acquisition of Canna Farms through the purchase of Vivo Cannabis in 2023. The facility, which had been used for cannabis cultivation and processing, was closed due to declining cannabis prices and operational inefficiencies.
In 2022, MediPharm also sold its Australian manufacturing facility to a local cannabis company. The company said at the time that the sale was part of MediPharm’s broader strategy to streamline operations and refocus on expanding its presence in key markets like Europe.