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Receivership may be one of few viable options for struggling cannabis companies facing upcoming debt obligations, according to a recent article in JD Supra that references information published in October by Green Market Report. Publicly traded multi-state cannabis operators are facing a looming debt of $1.83 billion due by 2026, which may suggest even larger debts for private cannabis companies. This situation raises concerns that insolvencies within the cannabis industry could rise significantly in 2025 and 2026 unless these companies effectively manage their debts and secure funding.

By Neil Sheaffer

At the time of writing this post, the number of Coronavirus (COVID-19) cases in the United States is rising. The World Health Organization (WHO) officially declared a pandemic. The Governor of California issued a “Stay-at-Home” Order to reduce the spread of the coronavirus by limiting non-essential activity. The courts in California are generally closed to the public. Being engulfed in the receivership industry, we have extensive experience with unsafe and unsanitary living conditions. Griswold Law often deals with properties that pose significant health and safety risks to communities across California. However, the COVID-19 outbreak is the first public health emergency that caused California to quarantine itself. Griswold Law is adapting as quickly as possible to these changing circumstances.

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.