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Distressed Cannabis Business Takeaways – Canna Law Blog™

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On February 28th, I moderated our firm’s “Distressed Cannabis Businesses” webinar. In that webinar, Griffen, Ethan, Vince, and I discussed the current financial and economic pressure the entire cannabis industry is facing today. We covered reorganization, litigation, dissolution, M&A, receivership, secured interests, and liquidation. And we of course discussed how state-by-state cannabis regulations impacts all of the foregoing. If you missed distressed cannabis buinsses webinar, here are the highlights:

Bankruptcy

Because cannabis remains federally illegal, filing for bankruptcy in U.S. federal court isn’t really an option for a distressed or insolvent cannabis business. However, as Ethan explained in the webinar, the case is less clear when the debtor is just an ancillary cannabis business. This is a nuanced, fact-specific area of law, with courts coming to seemingly inconsistent conclusions across jurisdictions.

Bankruptcy is a distressed business tool for re-organization in order to survive. Without it, the cannabis industry is left with a few (often inadequate) alternatives to deal with financial fall out.

Receivership

Court-appointed receivers are neutral, third-parties that will take over a distressed cannabis business’s operations. A receiver’s sole purpose is to preserve and protect the business during a problematic period – and, if you take care to ensure that your receiver is well-versed in the cannabis industry, he, she or it can typically handle everything from sales to personnel to accounting (their powers can be very broad).

Keep in mind that the point of the receiver is not to run the business for the benefit of creditors or even to re-structure–it’s to run the business until the underlying legal proceedings are concluded. The appointment of receivers and their treatment by cannabis regulators is also going to change from state to state (see here for Oregon, for example) with things like disclosures, changes to the license, and continued reporting.

Assignment for the benefit of creditors

An assignment for the benefit of creditors (“ABC”) is controlled by state statutes. An ABC is a contract by which an economically troubled entity (“Assignor”) transfers legal and equitable title, as well as custody and control, of its assets and property to an independent third party (“Assignee”) in trust, who is required to apply the proceeds of sale of the property to the assignor’s creditors in accord with priorities established by law. ABCs really only make sense if there are significant assets to liquidate.

ABCs are most successful when the Assignor, Assignee and creditors cooperate but can be imposed even if the creditors are not supportive. Further, like a receivership action, ABCs do not result in a reorganization of a company. While ABCs may technically be available to the cannabis industry, they don’t make a ton of practical sense. This is mainly because of all of the regulatory reporting and regulatory prohibitions around the sale of licenses, inventory, and/or cannabis cash. Still, they’re on the table for distressed cannabis businesses.

The Uniform Commercial Code (UCC)

Many cannabis companies offered up security interests to lenders in order to score some cash. And now, in this financial climate, no loan is going out to a cannabis company without some kind of collateral. To have a valid security interest, you need to follow the UCC, and pay attention to any state variances under state UCC laws.

Article 9 of the UCC covers secured transactions. In a secured transaction, the parties are typically the debtor and the creditor. The creditor’s goal with a cannabis company security interest is to attach and then perfect its interest in the collateral so that the creditor can later take possession of that collateral in the event of a default (without having to go to court). The creditor then liquidates the collateral and takes from the proceeds the remainder of whatever it lent in order to make itself whole. The rest then goes to junior creditors, if any, and then back to the debtor (which seldom happens). For more on the structure of UCC-1s in cannabis, see here.

M&A

Lots of cannabis companies are looking to sell now before they lose everything they’ve put into the business. This presents a unique opportunity for certain buyers who may be looking at deeply discounted cannabis business purchases. For a distressed cannabis business, like any other business, buyers need to run serious M&A due diligence. Particularly though for distressed cannabis businesses, due diligence is crucial when it comes to things like litigation, contract breaches (non-performance, insolvency, and/or breaches of operating covenants), and encumbrances on various assets.

It’s not pretty out there right now in the cannabis economy, and we sincerely hope that this phase of distressed cannabis businesses can pass quickly without too much blood in the water.



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Thinking about Suicide, Smoke Some Weed

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The conversation surrounding medical cannabis has gained significant momentum in recent years, especially as more jurisdictions legalize its use for therapeutic purposes. A recent study has added a compelling dimension to this dialogue, revealing that patients who utilize medical cannabis are less likely to experience suicidal thoughts. This finding is particularly pertinent given the rising rates of mental health issues and suicidality across various demographics. This article will explore the study’s methodology, findings, implications for mental health treatment, and the broader context of cannabis use in psychiatric care.

 

Overview of the Study

 

 Research Design

 

The study was conducted by a team of researchers interested in understanding the mental health outcomes associated with medical cannabis use. They focused on a cohort of patients who had been prescribed cannabis-based medicinal products (CBMPs) for various medical conditions, including chronic pain, anxiety disorders, and post-traumatic stress disorder (PTSD). The researchers employed a longitudinal design, allowing them to track changes in mental health status over time.

 

 Participants

 

The study involved a diverse group of participants, including adults from various age groups, genders, and backgrounds. All participants had a documented history of mental health issues and were seeking alternative treatments due to inadequate responses to conventional therapies. The sample size included 500 patients who provided informed consent to participate in the research.

 

 Data Collection

 

Data were collected through self-reported questionnaires administered at multiple points: before starting medical cannabis treatment and at regular intervals thereafter (e.g., one month, three months, and six months post-initiation). The questionnaires assessed various aspects of mental health, including:

 

  1. Suicidal Ideation: Participants rated the frequency and intensity of any suicidal thoughts they experienced.

  2. Depression and Anxiety Symptoms: Standardized scales were used to measure levels of depression and anxiety.

  3. Quality of Life: Participants reported on their overall quality of life and well-being.

 

Reduction in Suicidal Thoughts

 

One of the most significant findings from the study was that patients who began using medical cannabis reported a marked reduction in suicidal ideation. Specifically:

 

 

  • Post-Treatment Outcomes: Within three months of initiating cannabis treatment, this figure dropped to around 10%. By six months, only about 5% reported ongoing suicidal thoughts.

 

This substantial decline suggests that medical cannabis may have a protective effect against suicidality for certain patients.

 

 Improvement in Mental Health Symptoms

 

In addition to reduced suicidal thoughts, many participants reported improvements in other mental health symptoms:

 

  1. Anxiety Reduction: Around 70% of participants noted decreased anxiety levels after starting medical cannabis treatment.

  2. Depression Alleviation: Approximately 65% reported an improvement in depressive symptoms. These findings align with previous research suggesting that cannabinoids may help alleviate symptoms associated with mood disorders.

 

Demographic Insights

 

The study also explored how demographic factors influenced outcomes:

 

  1. Age Variations: Younger adults (ages 18-30) showed more significant reductions in suicidal ideation compared to older adults. This may suggest that younger individuals are more responsive to the therapeutic effects of cannabis.

  2. Gender Differences: Female participants reported higher initial levels of suicidal thoughts but experienced similar reductions as their male counterparts following treatment.

 

Contextualizing the Findings

 

The Debate on Cannabis and Mental Health

 

The relationship between cannabis use and mental health has been complex and often contentious. Historically, many studies have highlighted potential risks associated with recreational cannabis use, including increased rates of anxiety, depression, and psychosis. However, this new research emphasizes the potential benefits of medicinal cannabis for patients with severe mental health issues.

 

 Recreational vs. Medicinal Use

 

It is essential to differentiate between recreational and medicinal cannabis use:

 

  • Recreational Use Risks: Research has indicated that recreational users may be at higher risk for developing mental health issues. For instance, a study published in *JAMA Psychiatry* found that frequent recreational cannabis users were more likely to report suicidal thoughts compared to non-users.

 

  • Medicinal Use Benefits: In contrast, medicinal cannabis is often prescribed specifically for its therapeutic properties. The cannabinoids found in medical products—such as THC (tetrahydrocannabinol) and CBD (cannabidiol)—have been shown to have anxiolytic (anxiety-reducing), antidepressant, and neuroprotective effects.

 

 Mechanisms Behind the Effects

 

While this study provides compelling evidence regarding the benefits of medical cannabis for reducing suicidal thoughts, it also raises questions about the underlying mechanisms at play:

 

  • Endocannabinoid System: The endocannabinoid system (ECS) plays a crucial role in regulating mood, stress responses, and emotional processing. Cannabinoids interact with ECS receptors (CB1 and CB2), potentially modulating neurotransmitter release related to mood regulation.

 

 

  • Pain Management: Chronic pain is often linked with depression and suicidal ideation. By alleviating pain symptoms through medical cannabis use, patients may experience an overall improvement in their quality of life and mental health status.

 

 Implications for Treatment

 

The findings from this study have several important implications for clinical practice regarding mental health treatment:

 

Integrating Medical Cannabis into Treatment Plans

 

Given the promising results regarding reduced suicidality among patients using medical cannabis:

 

 

  • Personalized Treatment Approaches: As with any treatment modality, it is crucial for healthcare providers to tailor approaches based on individual patient needs. Medical history, current medications, and personal preferences should all be considered when recommending cannabis as a treatment option.

 

 Need for Further Research

 

While these findings are encouraging, they also underscore the necessity for further research:

 

 

 

Addressing Concerns About Cannabis Use

 

Despite the positive findings regarding medical cannabis use in reducing suicidality, it is essential to address potential concerns:

 

 

While medicinal use can offer benefits, there is still a risk associated with misuse or dependency on cannabis products:

 

 

 

Stigma Surrounding Cannabis Use

Despite growing acceptance of medical cannabis, stigma remains a barrier for many individuals seeking treatment:

  • Concealment of Use: Many patients feel compelled to hide their cannabis use due to fear of judgment, leading to a lack of open dialogue with healthcare providers, which can hinder effective treatment.

 

  • Misconceptions and Misinformation: Stigma is often fueled by misconceptions about cannabis, including its association with addiction and recreational use, which can deter patients from seeking necessary medical care.

 

  • mpact on Mental Health: The stigma associated with cannabis use can contribute to negative mental health outcomes, such as anxiety and depression, as individuals grapple with societal perceptions and internalized shame.

 

Healthcare providers should foster open conversations about medical cannabis with their patients. Addressing concerns directly can help reduce stigma and encourage individuals to seek appropriate care.

 

Conclusion

 

A recent study indicates that patients using medical cannabis experience a significant reduction in suicidal thoughts, underscoring its potential therapeutic benefits amid rising mental health issues. Understanding alternative treatment options is increasingly vital, and while further research is needed to explore the mechanisms and long-term effects, this study supports considering medical cannabis as a viable treatment for severe mental health conditions. By fostering open communication about treatment options and promoting responsible use practices, healthcare providers can better support patients. As societal attitudes toward cannabis evolve alongside scientific understanding, prioritizing comprehensive care for those facing mental health challenges is essential, recognizing medical cannabis’s potential to alleviate suffering and improve well-being.

 

CANNABIS FOR TEEN SUICIDE RATES, READ ON…

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Parenting in the New Cannabis Reality

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Teenagers Whose Parents Are Not Against Cannabis Use Four Times More Likely to Take Drug Says New Study, but Is That a Bad Thing?

 

Introduction

 

The landscape of adolescent substance use is continually evolving, particularly with the increasing normalization and legalization of cannabis across various regions. A recent study conducted by researchers at Washington State University has shed light on a interesting trend: teenagers whose parents are not opposed to cannabis use are four times more likely to experiment with the drug. This article delves into the findings of the study, the implications for parents and society, and the broader context of adolescent substance use.

 

Research Overview

 

The study, published in the *Journal of Child and Family Studies*, involved a sample of 276 adolescents aged between 13 and 17 years. The researchers aimed to explore the relationship between parental attitudes towards cannabis and adolescent usage patterns. The participants were asked about their perceptions of cannabis, their parents’ views on drug use, and their own experiences with cannabis.

 

 Parental Influence

 

One of the most striking findings was that teenagers who perceived their parents as accepting or neutral towards cannabis were significantly more likely to have tried the drug themselves. Specifically, those whose parents did not express strong opposition to cannabis use were four times more likely to report having used it. This correlation suggests that parental attitudes play a crucial role in shaping adolescent behavior regarding drug use, but controlling a narrative in their kids reality may be more important than pretending you can stop certain behaviors.

 

Relationship Dynamics

 

The study also examined the quality of relationships between parents and their children. Adolescents who reported close relationships with their parents especially those whose parents used cannabis were more likely to view the drug favorably. This finding raises important questions about how parental modeling and communication influence adolescent decision-making.

 

The Broader Context of Cannabis Use Among Teenagers

 

 

As cannabis becomes legalized in more states and countries, its perception as a harmful substance is shifting. Many young people view cannabis as less dangerous than other drugs, a belief that is often reinforced by media portrayals and social acceptance. This normalization can lead to increased experimentation among teenagers, particularly if they feel that their parents are indifferent or supportive of such behaviors.

 

 

According to the National Institute on Drug Abuse (NIDA), cannabis remains one of the most commonly used illicit drugs among adolescents in the United States. Recent surveys indicate that approximately 35% of high school seniors reported using cannabis in the past year. The increasing accessibility and changing legal status of cannabis contribute to these rising numbers.

 

Implications for Parents

 

 

Given the findings of this study, it is evident that open communication between parents and teenagers is vital. Parents should engage in discussions about drug use, including cannabis, to establish clear expectations and boundaries. By fostering an environment where teens feel comfortable discussing their thoughts and experiences, parents can help mitigate risks associated with substance use.

 

 

Parents must articulate their views on cannabis clearly. While some may feel inclined to adopt a permissive attitude due to changing societal norms, it is essential to consider the potential consequences for their children. Setting firm boundaries can help adolescents navigate peer pressure and make informed decisions about drug use.

 

 

Parents serve as role models for their children. If they engage in healthy behaviors and demonstrate responsible decision-making regarding substances, their children are more likely to adopt similar attitudes. Conversely, if parents openly use cannabis or express ambivalence towards its use, they may inadvertently encourage their children to experiment with it.

 

 The Role of Education

 

 

Educational institutions play a crucial role in addressing substance use among adolescents. Comprehensive drug education programs can provide students with accurate information about the risks associated with cannabis use and equip them with skills to resist peer pressure. Schools should collaborate with parents to ensure consistent messaging regarding substance use.

 

 

Community organizations can also contribute by offering resources and support for families navigating discussions about drug use. Workshops, seminars, and informational sessions can empower parents with knowledge and strategies to engage their children effectively.

 

The Impact of Legalization on Adolescent Use

 

 

The legalization of cannabis for recreational use has sparked debates about its impact on public health, particularly concerning youth. While proponents argue that legalization allows for regulation and education, opponents warn that it may lead to increased accessibility for minors.

 

 

Studies examining states that have legalized cannabis indicate mixed results regarding adolescent usage rates. Some research suggests that legalization does not significantly increase teen usage rates; however, other studies highlight a correlation between increased availability and higher rates of experimentation among youth.

 

 Addressing Misconceptions About Cannabis Use

 

Perceptions vs. Reality

 

Many teenagers perceive cannabis as a relatively harmless substance compared to alcohol or tobacco. This misconception can lead them to underestimate the potential risks associated with its use, including impaired cognitive function, mental health issues, and addiction.

 

The Importance of Accurate Information

 

Parents should strive to provide accurate information about cannabis, including its effects on developing brains and potential long-term consequences. By addressing misconceptions directly, parents can help their children make informed choices about substance use.

 

Conclusion

 

The Washington State University study emphasizes the strong impact of parental attitudes on adolescent cannabis use. As societal norms shift, it’s essential for parents to have open discussions with their children about drug use while setting clear boundaries and modeling healthy behaviors. By creating an environment of communication and understanding, parents can reduce the risks associated with adolescent substance use. Additionally, schools and community organizations should collaborate to offer resources that help families navigate these challenges.As cannabis becomes more normalized, prioritizing education, communication, and responsible parenting is crucial for safeguarding future generations’ well-being

 

THE GUIDE TO PARENTING WITH LEGALIZATION, READ ON..

STONED PARENTING TIPS

THE GUIDE TO STONED PARENTING – WHAT TO TELL YOUR KIDS!



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Runners’ High or Get High to Run?

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Running Sober vs. High on Marijuana: How Weed Affects Your Workout

 

As the cultural and legal landscape surrounding cannabis continues to shift, many fitness enthusiasts are exploring its potential role in exercise routines. A growing number of runners are experimenting with cannabis use before workouts, sparking debates about its impact on physical performance. Does it enhance the experience or hinder results? This article delves into the science behind running sober versus running high, examining how cannabis affects endurance, focus, and overall workout performance.

 

The Basics of Running Sober

 

Running sober has long been the standard approach for athletes and fitness enthusiasts. Without external substances, runners rely on their natural physical and mental capacities to perform. This approach offers several benefits:

 

 

When running sober, the mind remains clear, allowing athletes to concentrate fully on their pace, breathing, and surroundings. This mental clarity can be crucial for maintaining proper form and achieving peak performance.

 

 

Sober running promotes a strong connection between the mind and body. Runners can accurately gauge their exertion levels, recognize signs of fatigue, and adjust their intensity accordingly.

 

 

Without the influence of substances, sober runners experience consistent physical responses to training. This consistency makes it easier to track progress, set realistic goals, and develop effective workout plans.

 

 

The Basics of Running High

 

Running high involves consuming cannabis before a workout, typically through smoking, vaping, or ingesting edibles. Advocates claim that cannabis can enhance the running experience in various ways:

 

 

Cannabis is known for its analgesic properties, which can help reduce muscle soreness and joint pain. Some runners report that cannabis allows them to push through discomfort and extend their workouts.

 

 

Cannabis can create a sense of euphoria or relaxation, often referred to as a “runner’s high.” For some, this altered perception makes running feel more enjoyable and less monotonous.

 

 

Cannabis may enhance the brain’s ability to enter a state of flow, where the runner feels deeply immersed in the activity. This can lead to creative thinking and a stronger connection to the running experience.

 

 

The Science of Cannabis and Exercise

 

To understand the effects of cannabis on running, it’s essential to examine its active compounds and how they interact with the body.

 

 

Cannabis contains two primary compounds that affect physical and mental states which are:

  • THC (tetrahydrocannabinol): The psychoactive component responsible for the “high.” THC alters perception, mood, and coordination.

 

 

The ratio of THC to CBD in a cannabis product significantly influences its effects on a workout. Products high in THC may impair coordination, while CBD-dominant options can provide relief from pain and inflammation without causing a high.

 

 

The body’s endocannabinoid system plays a crucial role in regulating mood, pain, and inflammation. Cannabis interacts with this system, potentially enhancing its natural functions. For instance, the endocannabinoids released during exercise are thought to contribute to the “runner’s high.”

 

Benefits of Running High

 

Proponents of running high argue that cannabis offers unique benefits that can enhance the workout experience:

 

 

Cannabis’s analgesic properties make it an attractive option for runners dealing with chronic pain or soreness. By reducing discomfort, it allows athletes to train longer and recover faster.

 

 

For some, running high turns a mundane workout into an enjoyable experience. The euphoric effects of THC can make runners feel more motivated and engaged.

 

 

Cannabis’s calming effects can help reduce pre-run anxiety, particularly for individuals preparing for races or long-distance runs. This relaxation can improve performance by preventing tension and overexertion.

 

Should You Try Running High?

 

If you’re considering running high, it’s essential to approach it with caution. Start with a low dose of cannabis in a safe and familiar environment. Pay attention to how your body responds and avoid using cannabis before races or high-stakes training sessions.

 

Risks and Drawbacks of Running High

 

Despite its potential benefits, running high comes with significant risks that runners should consider:

 

 

THC can impair motor skills and reaction times, increasing the likelihood of injuries or accidents during a run. This is especially dangerous for outdoor runners navigating traffic or uneven terrain.

 

 

Cannabis may distort a runner’s perception of effort, leading them to overexert or underestimate their limits. This can result in fatigue, dehydration, or even injury.

 

 

Smoking or vaping cannabis before running can irritate the lungs and reduce oxygen intake, negatively affecting endurance and performance.

 

 

In regions where cannabis use is prohibited, running high may carry legal consequences. Additionally, athletes competing in regulated events risk disqualification if cannabis use violates anti-doping rules.

 

Comparing the Two (Running sober vs high)

 

Performance: Running sober often leads to more predictable performance, as cannabis can either enhance or hinder depending on tolerance and strain.

Safety: While weed may reduce pain, it can impair judgment, making it harder to gauge limits or react to sudden changes in the environment.

Mental State: Some runners find that cannabis helps them relax and overcome pre-run anxiety, while others feel it clouds their mental clarity.

 

Conclusion

The decision to run sober or high is deeply personal and depends on individual preferences, goals, and circumstances. Running sober offers consistency, clarity, and safety, making it ideal for competitive athletes and those focused on measurable progress. On the other hand, running high can enhance enjoyment, reduce pain, and provide a unique mental experience, making it appealing for recreational runners.

 

Ultimately, the key is to approach cannabis use thoughtfully and responsibly. Whether you choose to lace up your running shoes sober or high, prioritizing safety and listening to your body will help ensure a rewarding workout experience.

 

RUNNERS AND MARIJUANA, READ ON…

RUNNERS USING CANNABIS

HOW DOES A RUNNER’S HIGH REALLY WORK? CLICK HERE!

 



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