This can have noteworthy implications as to how a cannabis company conducts operations including a need to self-fund working capital. Another factor leading to financial distress in the cannabis industry is competition from the black market. Because the U.S. legal cannabis market is prohibited from interstate commerce the supply of cannabis is fragmented and state specific. As a general matter, UST policy largely bans cannabis companies from filing for bankruptcy because cannabis is illegal at the federal level. This has historically resulted in cannabis companies restructuring through various state court alternatives such as receivership.

Source: Forbes June 23, 2023 12:50 UTC