Hexo Revealed As Licensed Producer Sued By MediPharm For Breach Of Contract

MediPharm Labs Corp. LABSMEDIF said Friday its subsidiary MediPharm Labs Inc. has filed a statement of claim against the unnamed licensed producer for failing to pay outstanding amounts of around $9.8 million pursuant to the cannabis oil sale agreement. The company filed a claim in the Ontario Superior Court of Justice’s London Office, alleging that no payments have been made to MediPharm from Hexo since October.

According to BNN Bloomberg, which managed to reach the court documents, the unnamed licensed producer is Hexo Corp. HEXO.

It turns out that the supply agreement was initially signed between MediPharm and Newstrike Brands Inc., which Hexo acquired for $260 million in the meantime.

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Hexo’s vice president of communications Isabelle Robillard confirmed the conflict relates to the deal reached by Newstrike before Hexo purchased the company, and said Hexo plans to “vigorously defend the claim."

“The contract is a supply agreement for which we had serious concerns and, in an effort to drive value for our shareholders, we attempted to work in good faith towards a resolution that was suitable for both parties. Unfortunately, these efforts were unsuccessful,” Robillard said in an email to BNN Bloomberg.

The following was stated in the court filing:

“The Defendant [Hexo] has failed to fulfill its contractual obligations for the months of November 2019, December 2019, and January 2020, specifically, the invoices have been delivered by the Supplier and Hexo has failed to pay the 50 per cent payable for the amount of the committed purchase for those months.

“The Supplier has fulfilled all of its contractual obligations and there has been no complaint by Hexo regarding the quality of the product delivered. Hexo is simply in breach of contract.”

Hexo’s shares traded down 2.2% to $1.30 per share at time of publication.