Restructuring issues and challenges in the cannabis industry

The legalization of recreational cannabis in 2018 opened the doors for Canada to be a first-mover in what analysts predicted would be an exciting and lucrative industry. Although the cannabis industry has experienced significant business growth, recent headwinds have resulted in some cannabis companies starting to encounter short-term liquidity challenges as they grow their operations.

Faced with such challenges, licensed cannabis producers need to be mindful of restructuring issues and challenges, especially since the legislative environment, at both the federal and provincial levels, is new territory for business people and their professional advisors.

The legal and regulatory landscape varies across the provinces, which can be of particular concern to companies operating in multiple jurisdictions. The federal government, through Health Canada, controls licensing throughout the country. However, the individual provinces control the distribution of cannabis within their respective region and the applicable provincial laws differ considerably throughout the country.

This legislative complexity compounds when the fragmented cannabis regulations intersect with the federal insolvency legislation. The value and method by which the assets of a cannabis business may be realized can vary considerably, from one region to the next. [Read More @ Denton’s]