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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
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