Cannara Biotech expands credit facility to C$80m with BMO and TD

The Québec cannabis producer has upsized its syndicated debt facility by C$30m and extended its maturity to December 2029.

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Cannara Biotech has entered into an amended syndicated credit agreement with Bank of Montreal and TD Bank, increasing its total committed borrowing capacity to C$80 million. The deal represents a C$30 million uplift from the roughly C$50 million accessible under the previous structure and extends the maturity date by two years, to December 2029.

The restated facility is split equally between a C$40 million term loan and a C$40 million revolving credit facility. The revolver was previously capped at C$10 million, so the fourfold increase in committed revolving capacity is the most significant structural change. BMO continues as administrative agent and sole bookrunner; TD joins the syndicate as co-lead arranger for the first time, broadening the company's institutional banking relationships.

Use of proceeds

Cannara said the term loan will refinance amounts outstanding under its existing term loan, capital expenditure facility and revolving facilities, with residual proceeds directed toward ongoing capital investment at its Valleyfield site in Québec. The company is developing a new post-processing centre at Valleyfield designed to support EU-GMP certification, and is activating additional cultivation zones to meet what it describes as growing demand. The restated facility also includes revised financial covenants intended to give the company greater flexibility as it progresses those projects.

Chief executive Zohar Krivorot described the deal as a "strong endorsement" of the company's disciplined, profitable growth, while chief operating officer Niko Sosiak said the refinancing "meaningfully strengthens" Cannara's capital structure. Nicholas Fozard, the recently appointed acting chief financial officer, said he looked forward to investing "with discipline" in the company's growth priorities.

Market context

The Canadian licensed cannabis sector has had a turbulent relationship with institutional debt. Many producers that expanded aggressively in the years immediately following legalisation struggled to service their borrowings as wholesale prices fell and oversupply persisted. Against that backdrop, a syndicated facility from two of Canada's largest banks, with no equity dilution, is a meaningful signal of Cannara's relative financial health. Vertically integrated operators with low-cost production models, such as Cannara with its Québec-based energy advantage, have generally fared better on unit economics than peers reliant on higher-cost provinces.

The EU-GMP angle adds a cross-border dimension. Several Canadian producers have pursued European export licences, but certification timelines are long and regulatory requirements are demanding. Success would open access to Germany's recently liberalised adult-use market and other EU member states that permit medical cannabis imports. Cannara has not disclosed a target timeline or named a European distribution partner, so the international growth ambition cited by the CEO remains early-stage. Investors will be watching for a named EU partner or a confirmed GMP inspection date as the next substantive milestone.

Cannara's two Québec facilities together cover more than 1.6 million square feet, giving it approximately 100,000 kilograms of potential annualised cultivation output. The company is listed on the TSX under the ticker LOVE and on the OTCQX under LOVFF.

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