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Choom Gets Creditor Protection

The Supreme Court of British Columbia has granted an order for creditor protection to Vancouver-based cannabis retailer Choom Holdings and its subsidiaries.

Choom says competition in the retail sector as well as “the loss leading priced retailers in Alberta,” were the reason its sales decreased over the past year.

With increasing competition in the cannabis retail market many cities are nearing the saturation point, particularly in cities like Edmonton, Calgary, Toronto and Hamilton, with average sales per store declining as more stores continue to open. The advent of discount retailers has put additional pressure on retailers as many struggle to make money in the sector.

The under-pressure Canadian company was provided “protection from their creditors pursuant to the Companies’ Creditors Arrangement Act (Canada) CCAA.” Choom needs creditor protection to complete a sale and investment solicitation process (SISP) which would clear the way for a transaction allowing them to address their liquidity issues and stabilize operations. The cannabis retail company intends to operate its business while the CCAA proceedings and SISP are ongoing.

Interim Financing Loan

To be able to fund the CCAA proceedings, the SISP and other short-term working capital requirements Choom has struck a deal with Aurora Cannabis Inc. the lenders in this instance. Aurora Cannabis Inc. — which is a significant shareholder of Choom — will advance an interim financing loan in the aggregate amount of $800,000.

Choom already has a $6 million secured debt owing to Aurora and on July 8, 2021 they completed a restructuring of that debt with Aurora agreeing to extinguish the principal of $20 million and interest accrued worth approximately $2.2 million. In return, Choom issued to Aurora a convertible debenture worth CA$6 million and maturing.

CCAA Proceedings

Choom Holdings and its subsidiaries obtained CCAA protection for an initial period of 10 days. This means that protection will expire on May 2, 2022, however the Supreme Court of BC has set a further hearing date for May 2 when an extension of the protection will be sought. Ernst & Young Inc has been appointed as monitor in Choom’s CCAA proceeding.


On December 31, 2021 Choom’s liabilities were $22.4 million and a court filing said that revenue from over half of the company’s rented retail stores was lower than generated costs. The COVID-19 pandemic was apparently responsible for the closing of three retail stores in Alberta in March 2020 and none were reopened. This is a far cry from earlier in the year when Choom’s revenue grew by 200%.

Choom had 12 locations operating in Alberta on March 1, 2022 as well as two in BC and three in Ontario with licenses pending for another six outlets. That same day Choom Holdings reported a net loss of $5.8 million for its quarter ended December 31, 2021, on sales of $4.2 million.

Tags: Aurora Cannabis Inc (1), BC cannabis retailer (1), Cannabis Industry (180), Cannabis Retail (387), CCAA (1), Choom Holdings (2), COVID-19 (45), SISP (1)