About the Cannabis Market

When cannabis was legalized for recreational use in California in 2016, only a handful of states had gone through the process of opening the market for marijuana manufacturing, distribution and sales. Today, seven years later, many reports point to the instability of the market and its growth challenges.

Operating a cannabis-related business in today’s market is challenging, and experienced receivers like Douglas Wilson Companies have seen this firsthand throughout one numerous receivership assignments. Because bankruptcy courts operate federally, cannabis companies currently are unable to file for bankruptcy protection. In essence, if cannabis companies are in need of restructuring or workout support, receivership can be a key tool for them to liquidate, recover value and repay debts.

Given the state of the market in California and in other states, expect to see many more of these troubled scenarios on the horizon.

Cannabis Challenges

While the early outlook for cannabis companies was very bright, many of the difficult realities around cannabis operations have since come to light. In large part because marijuana is not legal federally for recreational use, financing is difficult, cash is critical, licensing is challenging and regulations are ever changing.

Furthermore, because the cost of operating remains significant, the illicit market for marijuana remains very active, leading to competitive challenges.

Experience is crucial and having a team available that knows the in and outs of the market is an important part of succeeding in today’s cannabis market.

Lessons Learned in Cannabis Receiverships

Throughout Douglas Wilson Companies experience in cannabis receivership assignments, the firm has navigated several challenging areas unique to cannabis companies: