The parent company of cannabis packager Galaxie Brands was issued an order pursuant to the Companies’ Creditors Arrangement Act (CCAA) on August 6, on application by The Vancor Group Inc.

The Vancor Group is the largest creditor of Equipment Co., Galaxie Brands’ parent company, which owns the equipment Galaxie uses to conduct business. Galaxie Brands is a licensed producer of cannabis under the Cannabis Act and operates as a producer and co-packer of cannabis and cannabis products.

Galaxie Brands processes cannabis into various products for sale to its customers and provides packaging services at its facility in Puslinch, Ontario. However, neither Galaxie nor Equipment Co. cultivates, manufactures, or grows cannabis flower. 

Galaxie’s primary customers include other cannabis producers and provincial partners across Canada, including those in Ontario, British Columbia, Nova Scotia, Yukon, and New Brunswick.

Vancor has invested over $2.7 million in Equipment Co and Galaxie Brands on an unsecured basis. That debt has now matured as of May 31, 2024, and more than $2.1 million in outstanding debt is owed to Vancor. KPMG Inc. has been appointed as monitor of the CCAA process for Vancor. 

Vancor is owned by Corry Van Iersel, who also owns True North Cannabis, a chain of cannabis stores in Ontario.

While Galaxie’s production licence is not set to expire until February 2028, the company’s excise licence, set to expire on October 16, 2024, must be submitted by September 16, 2024. 

Beginning around September 2023, Galaxie Brands also entered into a payment plan with Health Canada to pay licensing fee arrears. 

The plan considers a monthly payment of approximately $15,000 to Health Canada for these arrears. As of August 2024, Galaxie owes about $30,481.05 to Health Canada on account of annual licensing fees for 2023. 

As of August 2024, Galaxie is also said to have owed the Canada Revenue Agency (CRA) around $4.1 million in unremitted excise tax. In May, the CRA requested that Galaxie prove it has enough money to continue operating and work on a payment plan. 

KPMG, the Proposed Monitor, reports that the CRA is the beneficiary of a $535,000 surety bond issued by Trisura Guarantee Insurance Company as security for Galaxie Brands’ excise tax obligations. 

Galaxie Brands also has around $569,000 in arrears related to Harmonized Sales Tax (HST) remittances to the CRA.

Equipment Co and Galaxie also owe some $2 million in accounts payable, primarily to suppliers, shipping and logistics services companies, and other cannabis licensed producers.

The main goal of the CCAA Proceedings is to stabilize Equipment Co and Galaxie’s businesses and to allow them to be sold to address these debts through a court-ordered process. 

Galaxie’s sales for the period of August 3 to November 1, 2024, are just over $4 million, with a closing cash balance of -$1.4 million. 

In 2023, BZAM completed its disposal of Galaxie Brands Corporation via a share purchase agreement, which it had acquired when it took over the Green Organic Dutchman who had taken over Galaxie Brands in 2021.

Galaxie’s brands include WAGNERS, Highland, ZIP, Stunnerz, Glob Headz, Lite Label, Munchie Box, and Cannabis Cartel.

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