A British Columbia Supreme Court judge has approved the bulk sale of more than 1,200 kilograms of cannabis by a company after the Canada Revenue Agency threatened to destroy it.

In a ruling released online this week, the court allowed Tantalus Labs Ltd. to move ahead with a hasty sale of its remaining inventory of cannabis flower after the CRA planned to destroy the product at its facility in Maple Ridge, B.C.

The agency had earlier declined to renew the companyB次元官网网址檚 excise tax licence due to financial difficulties, which saw Tantalus shed the bulk of its employees at the end of June due to looming insolvency.

Without the licence, the company wouldB次元官网网址檝e been unable to sell its remaining inventory and potentially recover more for creditors, including its main lender and the CRA itself.

As the date of its licence expiry approached, the company had to go to court for approval of the sale of its remaining inventory on what bankruptcy trustee Ernst & Young called a B次元官网网址渇ire sale basis.B次元官网网址�

Court documents say the company has more than $14 million in debt, mostly to lender Sungrown Mortgage Corp. and the CRA, and the company was forced to enter insolvency and sell off its remaining inventory under threat of destruction.

Justice Shelley Fitzpatrick allowed the sale to move forward, but said in her ruling that the circumstances were B次元官网网址渦nusualB次元官网网址� since Tantalus had only filed its insolvency notice less than two weeks before landing in court.

FitzpatrickB次元官网网址檚 ruling said the B次元官网网址渇ire saleB次元官网网址� circumstances were unfortunate, arising B次元官网网址渟omewhat inexplicably from the position of CRA, and CRAB次元官网网址檚 threat to enter TantalusB次元官网网址� premises and destroy the inventory and/or its value.B次元官网网址�

In its report on Tantalus tied to the insolvency, Ernst & Young said an B次元官网网址渙rderlyB次元官网网址� sale of the companyB次元官网网址檚 remaining product could fetch around $2 million, while a fire sale would net about $300,000.

Had the CRA renewed the companyB次元官网网址檚 licence, an orderly sale wouldB次元官网网址檝e benefited the agency itself B次元官网网址渁s a result of the increased tax revenues rather than the reduced proceeds anticipated to be received in a forced liquidation or fire sale scenario,B次元官网网址� Ernst & YoungB次元官网网址檚 report said.

Tantalus CEO Dan Sutton said Wednesday that many cannabis companies are struggling under the weight of regulatory and tax burdens placed on the industry.

Sutton said he couldnB次元官网网址檛 reveal too much since the insolvency process is still ongoing, but called the CRAB次元官网网址檚 actions B次元官网网址減eculiarB次元官网网址� because it wouldB次元官网网址檝e benefited as a creditor had it granted Tantalus more time.

B次元官网网址淭he judge was similarly confused,B次元官网网址� he said.

Sutton and many others have long complained about what he calls the B次元官网网址渆xtreme and burdensome excise tax requirements on top of payroll tax and GST payments in the Canadian cannabis industry.B次元官网网址�

The CRA, he said, seems to have changed its tune at the beginning of the year and has stepped up efforts to recoup back taxes owed B次元官网网址渨ith a more aggressive tone than it has historically.B次元官网网址�

Sutton said the ordeal has been B次元官网网址渄isappointing for everyone,B次元官网网址� including the city of Maple Ridge, where Tantalus employed nearly 80 people and hoped to create more jobs in the long term.

B次元官网网址淚 hope that lessons like Tantalus and many other companies, especially small businesses that are suffering under this grossly miscalculated excise tax, will become a lesson to the federal government to amend these regulations,B次元官网网址� he said. B次元官网网址淚t doesnB次元官网网址檛 seem to be a business that, or rather, a regulatory environment that validates small business participation at this time. (ItB次元官网网址檚) super troubling.B次元官网网址�

The CRA did not immediately respond to requests for comment.

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