Pot Firms’ Grim Reality: Cash Crunch, No U.S. Bankruptcy Access
- Some firms are said to be weeks away from running out of cash
- If they go bust, cannabis companies can’t use U.S. Chapter 11
A customer lights a joint at a cannabis lounge in West Hollywood, California.
Photographer: Kyle Grillot/BloombergThis article is for subscribers only.
It was only a year ago that exuberance enveloped the marijuana industry. Legalization was spreading and the growth potential seemed boundless.
But that bubble has burst as the reality of a difficult regulatory landscape sunk in. Since March, stocks are down by about two-thirds. Capital markets have largely frozen for all but the strongest companies. And now a cash crunch is leaving some on the verge of going bust. Only, thanks to the illegal status of cannabis under U.S. federal laws, firms there are blocked from seeking protection in bankruptcy court.