Surprise Inspection Forces Cannabis Company To Cancel $3M Sale Deal

YourWay Cannabis Brands Inc. YOUR YOURF has terminated the definitive agreement to sell Labtronix, Inc. for $3 million.

What Happened

Last week, the Labtronix manufacturing location was visited by the fire department for a surprise inspection and was ordered to cease all extraction operations immediately until certain improvements are made to the facility, the company said on Tuesday.

It is undetermined how long it will take to rectify this issue as it requires engineering and permitting through the City of Phoenix.

In direct response to this infraction the license holder that Labtronix was operating under pulled the license from the building requiring all operations of Labtronix to cease. The company is in discussions with the license holder to resolve the issue.

As a result, the company received notification from the buyer, terminating the sale agreement.

The special meeting of shareholders scheduled for Dec. 28, 2023 to vote on the sale of a 100% ownership interest in Labtronix for $3 million was also canceled.

With the move, the company had planned to separate itself from:

• all lawsuits both existing and unknown against Labtronix;
• all existing liabilities of Labtronix both known and unknown; and
• all tax liabilities about Labtronix (where essential all operations of the company have been conducted).

See also: YourWay Cannabis Brands Terminates Contracts With Old Pal And Airo

Shareholders Disagree

Interestingly, the latest update comes on the heels of Carl Saling III - who holds 28,814,400 shares, representing roughly 11% of the company's issued and outstanding common shares - filing a notice with YourWay Cannabis for the nomination of six highly experienced directors to be elected to its board at the annual general meeting that had been scheduled for Dec. 28, 2023.

Why? Saling’s move revealed the company’s shareholders are “deeply alarmed by the company's current trajectory and the looming transaction to sell its primary revenue-generating asset at a price significantly below its fair market value.”

The proposed slate of director nominees, announced by Saling last week, includes Jamie L Pearson, Michael Wang, Steven Jung, Courtney Roundy, Curtis Floyd and Carl Saling III.

Saling, who co-founded Hollister Biosciences, a company that later evolved and rebranded itself as YourWay Cannabis, sought to stop the proposed transaction, prioritize the completion of the audit and restore the company's trading status as quickly as possible.

'Kickback Schemes'

Meanwhile, in October, marijuana giant Trulieve Cannabis Corp. TRUL TCNNF, Harvest Health & Recreation and Randy Taylor Consulting filed a verified complaint in the Arizona Superior Court against, among others, the company, Labtronix and YourWay Cottonwood. The plaintiffs claim that the defendants, their related entities and employees, participated in unlawful kickback schemes to the detriment of the plaintiffs.