Small B.C. town braces for tough times ahead as cannabis company faces bankruptcy
The town of Lumby, B.C., is bracing for the potential bankruptcy of True Leaf, a major cannabis company and one of the biggest employers in the North Okanagan community.
When it broke ground two years ago, the company promised a boost in employment in a community historically focused on logging, but has since fallen on tough times.
True Leaf is seeking creditor protection in an effort to avoid bankruptcy just two years after spending $25 million to buy land and build a processing plant in the town just east of Vernon.
If it can't restructure, the town of fewer than 2,000 residents could lose up to $120,000 in property taxes and up to 40 jobs, Mayor Kevin Acton told CBC's Daybreak South.
"They made a huge investment in a very underutilized industrial park. So we had some really high hopes for their plans," Acton said.
"If it doesn't pan out, it's going to be a bit of a thing for us to rebuild for ourselves as well."
An oversaturated market of growers, supply chain problems and strict regulations have all posed challenges for the cannabis industry, even before the pandemic.
True Leaf has 40 acres of land in and around Lumby, including an 18,000 square-foot building for growing and processing cannabis.
Next few weeks crucial
CEO Darcy Bromford says the next few weeks will be crucial for the company, with a creditor vote near the end of the month.
"We're hoping it'll be approved by the courts and approved by the creditors and emerge in early November," Bromford said.
"And then the company will essentially have, you know, a friendly creditor and then we'll raise a little bit of money to keep going forward."
Lumby also has a history of persevering through financial ups and downs, including the closure of the Tolko and Riverside sawmills.
More recently, the credit union left town.
Town trying to keep local business alive
The latest news from the cannabis producer is another blow, Acton said. Aside from the loss of another employer, the company's taxes were around $100,000, he added.
"The challenge with that is being a small town, that's a good bump in taxes, but also we prepay those portions to the hospital district, to the [Regional District of North Okanagan], to the fire, to the police, so all of those things have already come out of our budget. So while we wait for the taxes, it does make a little bit of a challenge for our financial planning for sure."
The town is focusing on trying to keep local business alive and attract new employers, Acton said. Every empty storefront makes it a bit tougher for small businesses to stay afloat and keep prices competitive, particularly with other options available in nearby Vernon, he said.
Opportunities exist in Lumby's industrial park and True Leaf has plans to subdivide its property, he said. The town is also trying to attract more business by putting into effect a revitalization tax exemption bylaw in the downtown core.
As True Leaf's future hangs in the balance, Acton is watching closely.
"They have built a beautiful building and they've done everything we've asked, so we're rooting for them and we always want to see businesses succeed," Acton said.
"It is a bit of a sad thing if it doesn't pan out ... we were really counting on leapfrogging forward with this industry in our town."
