Growing Pains Get Real As The Cannabis Industry Evolves
The perception and allure of the easy-money cannabis industry is starting to bump into reality.
To give it context, cannabis is estimated to be a $20 billion business by 2020, according to Cassia Furman, a partner and cannabis authority at Vicente Sederberg LLC in Los Angeles.
Cassia and I were panelists at last month’s California Bankruptcy Forum Insolvency Conference, addressing bankruptcy and receivership options for the cannabis industry. As Cassia wryly noted, the underground business that used to operate out of your parent’s garage is now publicly traded in Canada. And in California, private equity cash is rushing in.
But this influx of investment is landing in an industry not quite ready for prime time. The recent wave of consolidation, mergers and acquisitions is impacting operators lacking the expertise to manage these changes, and a supply chain not quite caught up with itself.
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It’s a perfect storm of complications:
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At Douglas Wilson Companies (DWC), we believe we’re seeing the tip of the iceberg as the cannabis industry starts to experience more business failures. A new class of distressed assets is emerging. |
