Cannabis companies face a cash crunk and no bankruptcy protection
The bubble for legalized marijuana has somewhat burst for businesses facing a cash crunch. Now realizing the regulatory landscape, businesses in the cannabis industry realize that although their state may have legalized, federal laws limit the ability for businesses to raise capital and even file for bankruptcy protection.
For U.S. firms, this poses an intractable problem: Bankruptcy is governed by federal law, which considers marijuana an illegal substance. This means they can’t get Chapter 11 protection from creditors or a centralized sale process. Without that, the result could be a state-by-state scramble by creditors for assets.https://www.latimes.com/business/story/2019-12-17/pot-firms-cash-crunch-no-us-bankruptcy-protection?fbclid=IwAR3VfiQk4aEnq9g2hObuy4lyj6Ow8X4-QkelEdmsSYxPvbKypjHKCun187I
Learn more about how Rapid Funders can provide cannabis businesses working capital loans to make payroll, invest in growth and more.