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by Stockwatch Business Reporter

Amidst a broad market decline, the S&P/TSX Cannabis Index fell 9.41 points to 121.5 Wednesday, while the Canadian Securities Exchange Composite Index fell 14.88 points to 260.15. After requesting to be halted before trading started this morning, family-operated James E. Wagner Cultivation Corp. (JWCA) announced that it applied for creditor protection under the Companies' Creditors Arrangement Act (Canada), the same bankruptcy protection that Canntrust Holdings Inc. (TRST: $0.91) obtained yesterday. Just before 12 p.m. PT, James E. received an initial order granting it CCAA protection. When the company's shares resumed 15 minutes later, they quickly plummeted from 12 cents to five cents.

There were warning signs that trouble could be coming for James E. In fiscal Q1 (which ended Dec. 31, 2019), the company had revenue of just $264,000, down sharply from $1-million in Q4. The company tried to downplay the drop, attributing it to a "strategic decision" to defer sales to Q2 when prices would supposedly be higher. Aside from declining sales, James E.'s year-end working capital of $5.7-million looks fine at first glance, but that is because James E. included $6.7-million worth of harvested plants (compared with $264,000 in Q1 sales). Indeed, the company had cash of just $321,000 on Dec. 31.

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