‘There’s just no money coming in’: Cannabis sector bracing for wave of insolvencies in 2020
Oversupply, declining prices, and a slow rollout of stores in Ontario has led to consecutive quarters of weak revenue for many licensed producers.
Cannabis industry insiders are bracing for a slew of bankruptcies in the coming year as small and medium-sized companies low on cash struggle to raise funds in the downtrodden sector.
“We have had a busy few years, but next year we’re going to be busy for a different reason — we expect a few million dollars in legal fees from insolvencies and consolidation,” said Ranjeev Dhillon, a partner at McCarthy Tetrault LLP and the firm’s cannabis group lead.
Dhillon says that his team is already seeing companies that are heading down that path.
“Companies that cannot distinguish their brands and don’t have the money to keep up operations on existing facilities will not be able to carry forward,” he told the Financial Post in an interview. “The only kind of money you can raise right now, if at all, is debt.”
By Vanmala Subramaniam – The Financial Post
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