Receivership: The Remedy for Failing Cannabis Businesses in California

Cannabis businesses are not eligible for bankruptcy protection due to the federal prohibition against cannabis. Therefore, the receivership remedy is an effective path to address the struggles of a cannabis business. Seeking and obtaining a court-appointed receiver to take control of and operate a distressed cannabis business can be initiated by a lender affected by a failing business loan or a partner in the cannabis business alleging financial mismanagement.

For many reasons, the cannabis business industry is complex. There are several layered restrictions between pertinent local, state and federal statutes. One example discussed regularly is the inability for cannabis businesses to utilize the banking system. This restriction alone leads to accounting challenges, security concerns and leads to general lack of legitimacy for the industry as a whole. Further, insurance companies—including title insurance companies—are hesitant to wade into the cannabis industry due to the federally-regulated nature of their industry.

Above are just a couple examples displaying the complexity of the cannabis industry. Like any business industry, businesses will struggle and fail. Without the option of bankruptcy protection, relief is limited. The receivership remedy is a strong option to shepherd a failing cannabis business through financial and/or management struggles.

Griswold Law is uniquely positioned for cannabis business receiverships due to its experience as a court-appointed receiver over retail cannabis dispensaries, as well as its experience acting as legal counsel to receivers in court-ordered control of retail dispensaries and cannabis production facilities.

Griswold Law has substantial experience in California cannabis receiverships focused on business operations, local and state licensing, conditional use permits, banking and security. Further, Griswold Law have successfully obtained court approval to sell multiple cannabis businesses via receivership sale.

Richardson “Red” Griswold has been appointed as a receiver over 100 times by courts across California to take control of and operate distressed businesses and real estate. For more information, please contact Griswold Law at (858) 481-1300 or

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