By COLLIN GALLANT on February 19, 2020.
A proposed merger of Folium Biosciences and a U.S. investment company has fallen through, it was announced on Tuesday by Australis Capital, a firm connected to Aurora Cannabis.
The deal – amounting to a reverse takeover whereby Folium, a CBD producer with a major project in Medicine Hat, would assume control of its investor, Australis – was announced in early December. Terms were not disclosed.
On Tuesday, a release from Australis stated it “recently discovered new relevant information with regard to Folium and, on that basis, AUSA has decided to not proceed with the merger.”
Folium also no longer appears on the Australis website, whereas previously the two firms had been almost equally promoted.
Messages left by the News to Folium’s Colorado-based home office were not returned.
Local general manager Ryan Jackson deferred comment to head office, but told the News that work on the 13-month-old proposal to build a hemp processing plant here would not be affected.
“It’s slower than we hoped for, but we’re making good progress,” he said, repeating a plan to begin initial processing in an interim facility this year while the larger operation is being built.
Australis is set to release its corporate update on Feb. 26. That is billed in Tuesday’s release as a new strategy document.
Folium announced in January 2019 that it planned to build a 200,000 square-foot hemp processing facility in Medicine Hat that would employ several hundred employees once complete.
Last month, local Folium officials expressed confidence in the merger, stating that access to financing through Australis listing on the Canadian Securities Exchange would boost the company’s profile and outlook. As is, the local project is reportedly set to begin small-scale operations this year while the larger facility is still being planned.
The merger would have seen Folium’s current operations become a wholly-owned subsidiary of Australis, which would be renamed Folium and come under control of Folium’s ownership.
The company was created by Aurora as a stand-alone entity to house some U.S. state-level interests in order to maintain good standing with U.S. federal regulators, which still considers cannabis a federally restricted narcotic.
Folium Biosciences deals in CBD, a non-intoxicating product in cannabis and hemp, which is increasingly popular in cosmetics and health products.
Aurora holds a buyback option to repurchase Australis in the case of wider legalization of cannabis at the U.S. federal level.
Australis made a US$3-million investment in Folium in early 2019, just prior to the announcement of the Medicine Hat expansion.