Hadashville hemp startup fails to germinate

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This article was published 05/11/2021 (1279 days ago), so information in it may no longer be current.

A hemp startup near Hadashville that boasted of becoming the world’s largest indoor producer of cannabidiol (CBD) has lost its lease and owes the provincial government half a million dollars, after failing to bring a single product to market in nearly three years.

Botanist Organic Growers Corp. “is unable to fulfil its obligations” to the province under its lease agreement, Agriculture and Resource Development Minister Ralph Eichler said Monday in a written statement.

Eichler said the company “failed to provide an acceptable plan to move forward and the lease was terminated effective Sept. 28, 2021,” with Botanist owing $500,000.

The province, which owns the 300-acre property along the Trans-Canada Highway formerly home to Pineland Forest Nursery, is exploring new options for the site, Eichler added.

“We were not surprised,” RM of Reynolds reeve Trudy Turchyn said Monday in an interview outside the property’s padlocked front gate.

“We had heard that the hydro had been shut off and we could see the deterioration of the infrastructure.”

The RM heard nothing but silence from Botanist, which told the province it would create 200 jobs in Reynolds by 2022.

“We sent a welcome to them and asked that they communicate with us if there was anything the RM could do to help and never heard a word back,” Turchyn said.

Kim Furgala, Reynolds’ chief administrative officer, said a provincial official called Sept. 28 to confirm the company’s lease had been terminated.

Turchyn called the whole saga—which stretches back to May 2018, when the province announced it would close the publicly-owned Pineland and redeploy its 25 remaining staff—“a real shame.”

Residents often asked Turchyn for an update on the company, as they found the site’s deserted appearance at odds with Botanist’s grand claims.

“They’re all frustrated, they saw for the last three years everything deteriorate,” Turchyn said. “It almost became a joke because so many people in the last 65 years have worked at the nursery, myself included, and everybody took pride it in. And to see it go downhill, it’s a shame.”

Turchyn said the province should have kept the tree nursery, which was deep in debt, open and allowed it to diversify.

“That would’ve kept it going for the foreseeable future for sure, but they were restricted to just growing trees and bidding on tree contracts, so it was like it was planned to shut the nursery down.”

Botanist, an investor-owned startup with Winnipeg ties, purchased Pineland’s on-site assets for $1.43 million and began leasing the Crown land for $240,000 per year starting Apr. 1, 2019.

The company planned to use the site’s 300,000 sq. ft. of greenhouse space to grow and process hemp into CBD biomass, a non-intoxicating substance with purported therapeutic benefits. The company also planned to manufacture other products like infused lotions and edibles and retail them by late 2019.

In February 2019, when the deal was first announced, Botanist co-founder and chairman Duncan Gordon said an initial round of hiring would begin shortly and the first hemp plants would be planted in “two to three months.”

Gordon spoke of sinking “tens of millions of dollars” into research and production facilities, including a public education centre. The company also planned to forge partnerships with local farmers and First Nations.

Those claims had Reynolds council anticipating an economic boom that would bring young families into the municipality and create jobs and spinoff businesses.

In a September 2019 statement, Gordon admitted that Botanist was facing some “unavoidable administrative delays” that had prevented it from getting a crop in the ground, but maintained enthusiasm for the project.

“Every indication shows the company will meet their obligations (under the agreement),” a provincial spokesperson said that same month.

Turchyn said the province cut the company slack for too long.

“After a year they should have seen the writing was on the wall, that this was not going to work, and move onto the next proposal or withdraw their offer.”

Turchyn said Lac du Bonnet MLA Wayne Ewasko provided council with periodic but vague updates on the site. Ewasko’s constituency was redrawn in 2019 to include the Hadashville area.

In a Tuesday phone interview, Ewasko said Botanist’s business plan didn’t pan out and they fell behind on their payments. He said the government is now trying to recoup the money it’s owed through the courts.

Ewasko said the province can review other site proposals but probably can’t enter into a new lease until the court process wraps up.

In the meantime, Ewasko said he shares in the frustration felt by residents.

“There was a bit of a hope that something was coming back that was promising many good-paying jobs,” he said.

“We’re happy (the province) took it back,” Turchyn said. “Now we’re just hoping that they can move along quickly and get a company in here to run the facility.”

Wolseley MLA Lisa Naylor, the Opposition critic for environment and climate change, said the province should have involved Reynolds council in the project all along.

“If there had been some transparency and communication with the local council from the beginning, that would have been helpful,” Naylor said by phone. “Decisions shouldn’t be made on Broadway for people in those local communities without any consultation.”

Naylor said the government can’t prevent a business from going under but can engage the local community better.

“There’s been so much promise for that community and there’s been so much disappointment, she said, adding, “It’s not lost on me that this deal was made in an election year.”

Turchyn said council “would love some input into” future plans for the site.

“We need a business group to come up with really good, feasible ideas that are cost-effective. There must be some food product that could be grown here, with all these greenhouses. The water is amazing, they’ve got natural gas. There’s got to be something that’s profitable.”

The Reynolds and Whitemouth District Chamber of Commerce could not be reached for comment.

Turchyn said council wants to speak with Manitoba’s new premier, Heather Stefanson, about the site.

Next time around, Ewasko said the process “has to be a little bit more oriented around community and regional needs.”

The Botanist lease allowed the University of Winnipeg to continue conducting long-term climate change research at the site.

Dr. Richard Westwood, a professor in the departments of biology and environmental studies, said his access to the site isn’t jeopardized by the termination of the lease.

“I’m not concerned because we were told by the province that we would have access when we needed it, and nobody’s contacted us from the province to say that is not the case,” he said by phone.

Westwood said he hasn’t been to the site since late September when the lease was revoked. His team only makes site visits two or three times a year.

“We have long-term plantings there, very long-term trials that we’ve been working on over a number of years,” he said.

“Hopefully they’ll turn it back into a nursery because that’s what it should be…Tree planting is more important now than ever.”