Because cannabis is illegal under federal law, federal bankruptcy courts deny relief to plant-touching and ancillary cannabis businesses and deny remedies to their creditors. Instead, creditors and debtors must look to state receivership, assignments for the benefit of creditors (ABCs), workouts and other alternatives for relief.
These state-based remedies can become highly complicated due to the numerous and often changing state and local cannabis laws and regulations. In this environment, you need experienced counsel that can navigate state receivership and other insolvency proceedings impacting a cannabis business.
Distressed operators present significant opportunities for risk-tolerant, well capitalized investors that are able to execute quickly. These deals offer significant value, from existing licenses to key assets. But understanding and properly navigating the myriad of risks is key.