County Durham cannabis firm acquired in pre-pack administration

[Joolz]

A County Durham firm that had hoped to pioneer the use of CBD - the active ingredient in cannabis - for wellbeing products has been sold in a pre-pack administration.

 

Dodd Heres owed £1.7m to creditors, including large sums to two of its shareholders, but has now been sold as a going concern in a £50,000 deal to Tyneside-based State of Mind Food Supplements Ltd. The Consett-based business was set up in 2018, but after a lengthy research and development phase only, began trading last year and was said to have struggled to get a Food Standards Agency (FSA) licence that would allow it to sell CBD products which could fight pain and help regulate conditions such as type two diabetes.

 

Those challenges came despite the three-strong business having been awarded a near £500,000 grant from Government innovation agency Innovate UK in 2022 to help manufacture CBD-HQ – an oxidised version of CBD which occurs when cannabis or hemp is left open to the elements and is said to be more easily absorbed by the human body.

 

Insolvency experts at FRP, who had been first been consulted by the firm four years ago, say that with no licence to sell, the business turned to hemp products and tried to sell CBD-HQ products on a business-to-business basis. But that did not generate sufficient orders to lead to turnover and profit growth.

 

From 2022 the business had attracted around £1.45m investment from shareholders, and amid sales of £170,000 since last August, further backing was sought. Documents show the business had faced rent arrears to the tune of £40,000 and salary costs too.

 

Administrators Steven Ross and Allan Kelly were appointed to the business and subsequently set up a fast-tracked marketing process which resulted in three bid - described by FRP as "disappointing". Along with the business and assets of Dodd Heres, State of Mind Food Supplements Ltd acquired intellectual property developed by the firm surrounding its 'accelerated oxidisation process' which is used to get CBD-HQ from cannabidoil.

 

FRP said: "The company utilised all options to raise capital by way of director/shareholder loans, shareholder premium accounts and government grants where it was applicable to apply. Despite all efforts, the company's cashflow was such that the company could not meet ongoing and overdue labilities and advice was sought from FRP regarding the financial position of the company."

 

 

https://www.business-live.co.uk/enterprise/county-durham-cannabis-firm-acquired-29530886

[redbeard]

Crazy 

[ratdog]

On 15/07/2024 at 13:47, Joolz said:

Those challenges came despite the three-strong business having been awarded a near £500,000 grant from Government innovation agency Innovate UK in 2022 to help manufacture CBD-HQ

 

 

but couldn't get a government license to sell?

[Boojum]

Sounds fucking dodgy to me, how did they get such a massive grant without having a license ?

 

E2A Won't be the last CBD company to go under, with all the people who jumped on the bandwagon, the bubble is gonna burst.

Edited July 25 by Boojum

[Simple Jack]

The classification of CBD as a novel food product was pure dog in the manger bullshit. It was neither novel nor being used as a food. It was a cynical move to restrict access to cannabinoids of any kind as a matter of twisted principal.

 

33 minutes ago, Boojum said:

how did they get such a massive grant without having a license ?

 

It was an innovation grant, and innovate they did. They invented a process to manufacture CBD-HQ, a substance known to science, but incredibly rare. The nominal cost of CBD-HQ dropped 10,000 fold.  They must have been aware that if they wanted to market it, they would have to jump through  the FSA hoops and what that would entail. CBD-HQ really is a novel substance; what level of proof is required to deem it fit for human consumption? Alarmism aside, why would there be a market for something about which virtually nothing (apart from probably harmless) is known. 

 

It seems others have discovered or copied the same process. CBD-HQ is available in Netherlands and Germany retailing at 99 euros for 10ml  8% - comes with the caveat "not for human consumption"