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Cannabis companies are also victims of the pandemic

Even before COVID-19 began to decimate businesses in almost every industry sector, many cannabis companies were feeling the heat.  Many were running low on cash and investors were not willing to risk more.  For many of these enterprises, the pandemic has made a bad situation even worse and even some of the strong performers are faltering and trying to stay afloat.  In Canada, where the industry is legal on the federal level, bankruptcy filings under the CCAA have increased.  

In the United States where bankruptcy is not available to non-hemp based enterprises, receiverships and state court liquidations are likely to proliferate.  Time will tell which of the many players in this industry will be able to withstand this devastating situation.  

“The effects of the Covid-19 pandemic have exacerbated what were already difficult circumstances,” the company said in a statement, “making it even more challenging for CannTrust to attract new financing or a strategic partner.” There are other signs of strain, even in relatively healthy companies.

Tags

cannabis, bankruptcy, covid-19, restructuring & insolvency