Opportunities for Investment in Distressed Cannabis Assets The cannabis industry’s regulatory framework is extremely complicated to navigate. Due to the federal prohibition against cannabis, however, cannabis businesses are not eligible for bankruptcy protection, and cannot discharge their debts the same way that other businesses can. What are the Options for a Distressed Cannabis Business? However, well-capitalized and savvy investors may be able to take advantage of distressed assets in receivership if they are prepared to deal with the uncertainty and risk. Receivership can be expensive, and the costs are generally paid from the income stream generated by the receivership estate (AKA the cannabis business).
Succeeding in the cannabis industry is not easy, especially in California. Complex regulation, high taxes, expensive real estate, and competition with the black market are just a handful of factors that challenge cannabis businesses. The majority of players lack sufficient reserves and agility to stay in the game. Due to the substantial upfront costs required to obtain state and local licenses, many don’t even open their doors before cash flow problems lead to unpaid rent and defaulted loans. We are seeing an increasing number of distressed businesses in the cannabis space.
So, what happens when a cannabis business goes belly-up? A typical...
Read the full article @ Canna Law Blog