TGOD Prepares for Legal Battle with City of Hamilton

One of the most recent cannabis producers to join the Toronto Stock Exchange (TSX) is currently facing opposition into its expansion plans from a small community in Ontario.

A request for the expansion of a greenhouse facility for the growth of medical cannabis by The Green Organic Dutchman (TSX:TGOD) was shut down during a Hamilton, Ontario city council meeting on Friday (July 13).

The final vote was 9-4 against the motion, which had received support from the local city planner and had also been recommended for approval by city staff.

According to a report from The Hamilton Spectator, several opposing city councillors noted the city had just voted to confirm the limit for medical cannabis facilities allowed would be 24,000 square feet.

The company was looking to develop a 150,000 square foot greenhouse production facility and is now facing the possibility of only developing a 24,000 square foot growing and research facility.

The producer issued a statement in response to the result on Saturday (July 14) announcing it would challenge the decision with the Local Planning Appeal Tribunal (LPAT). TGOD indicated the proposed phase two represented a 6.5 percent of the total planned production.

Brian Athaide, CEO of TGOD said the company is proud of its roots in Hamilton and hopes to have a larger presence in the community.

The proposed appeal is speculated to take anywhere between months to over year. In light of this, TGOD warned if a resolution isn’t obtained in a “timely fashion” it will move the planned expansion of the Hamilton facility to the neighbouring province of Quebec. The company indicated it still had approval for its 24,000 square foot facility.

TGOD has a 1,107,000 square foot site in Valleyfield, currently under development. In its statement the company made a point of highlighting its production capabilities and the tech planned for this new facility in Quebec.

The cannabis producer signed a strategic partnership with Aurora Cannabis (TSX:ACB), which involved support for the construction of the Quebec site. Aurora even participated in the initial public offering (IPO) of TGOD in May.

Cam Battley, chief corporate officer for Aurora told the Financial Post the ruling did not concern them “overly much.” Battley, who also serves as a board member for TGOD’s board of directors explained the Ancaster facility is not “the big one.”

The decision created concern of legal fees to some city councillors with one even telling The Hamilton Spectator the city would most likely lose the appeal. TGOD said it is confident its appeal to the LPAT will succeed.

Public market reacts to vote against TGOD

News from the decision broke on Friday and, as such, the stock for TGOD began to drop. After reaching a day low price of C$5.66, stock for the company rallied closing the day at a price of C$6.04 representing an actual gain of 0.17 percent for the day.

During Monday’s (July 16) trading session the company’s share price has dropped 4.97 percent and reach a price point of C$5.75 per share to finish the day.

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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.