Distressed Asset Investors (Finally) Descend on California Cannabis Most of these distressed cannabis asset investors are prioritizing debt over equity because of the priority on pay outs in the event of a dissolution. Distressed asset investing — particularly in the California cannabis industry — is rife with risk. Though some cannabis businesses are opposed to “vulture investing” in the cannabis industries, I would urge everyone to keep an open mind as there are many California cannabis businesses with few realistic options for continued survival without a serious infusion of capital. All of the above, combined with cannabis businesses being unable to seek relief in federal bankruptcy courts has put many California cannabis companies on the path to complete failure.
In my ten years of advising and guiding cannabis companies from a corporate, transactional, and M&A perspective, and especially since 2012 (when Washington and Colorado legalized), every cannabis market in which I’ve worked has experienced a period of extensive business failures, consolidations, and market stress. And it’s that time now for California cannabis (and that was already happening before COVID-19 struck, which is actually a kind of economic shot in the arm for cannabis businesses, all of which have been deemed essential and...
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