Tag Archives: colorado

As federal policymakers move toward restricting hemp-derived cannabinoid products, a new state-level effort in Colorado is taking the opposite approach by moving to integrate low-dose THC beverages into mainstream hospitality.

A coalition led by Colorado-based attorney Brian Vicente, partner at Vicente LLP, has formed the Colorado THC Beverage Coalition and introduced legislation that would allow hemp-derived THC beverages—up to 10 milligrams per serving—to be sold and consumed in bars, restaurants, and event venues.

If successful, the bill would position Colorado alongside states like Minnesota and Tennessee, which have emerged as early leaders in normalizing hemp-derived THC beverages in social, alcohol-adjacent settings.

A Three-Tier System for THC?

At the core of the Colorado proposal is to treat THC beverages more like alcohol.

The legislation seeks to establish a regulated pathway for hemp-derived THC drinks to move through licensed distribution channels and into on-premise consumption environments. This model mirrors the three-tier alcohol system, creating clearer compliance standards while expanding access points beyond dispensaries.

For beverage brands, the implications are significant. Instead of being confined to cannabis retail, THC beverages could tap into existing hospitality infrastructure, unlocking new revenue streams for bars, restaurants, and event organizers.

“This is about meeting consumers where they already are,” Vicente has argued, emphasizing that low-dose THC beverages are increasingly viewed as an alternative to alcohol in social settings.

Why Minnesota Became the Model

Colorado’s effort draws heavily from Minnesota’s regulatory framework, widely seen as one of the most functional hemp THC markets in the U.S.

Since 2022, Minnesota has allowed the sale of low-dose hemp-derived THC edibles and beverages with defined potency limits, age restrictions, and testing requirements.

Notably, the state permits beverages containing up to 10 mg of THC per container, creating a standardized, sessionable product format that aligns with consumer expectations around alcohol.

This clarity has enabled breweries and beverage manufacturers to enter the category at scale, with many positioning THC drinks as a complementary or alternative offering to beer and spirits. Even mass retail such as Target stores in Minnesota are selling beverages by meeting the state’s licensing requirements.

The Federal Threat Reshaping the Market

A major federal policy change, set to take effect in November 2026, could upend the entire hemp-derived cannabinoid category.

The updated federal definition of hemp introduces a “total THC” standard and imposes a cap of just 0.3 milligrams of THC per container, effectively eliminating most existing THC beverage products.

Industry groups estimate that as much as 95% of current hemp-derived products could be wiped out under the new rules, with cascading effects on jobs, tax revenue, and investment.

This looming crackdown has created a paradox: while federal policy is tightening, states are experimenting with structured, regulated pathways that integrate THC beverages into existing consumer ecosystems.

Colorado’s push to expand access to hemp beverages is timely. In Washington, a bipartisan group of lawmakers, including Senators Rand Paul, Amy Klobuchar, and Joni Ernst, recently introduced the Hemp Safety Enforcement Act. This new bipartisan bill aims to give states a way to maintain control over intoxicating hemp products and potentially keep the category alive. Against that backdrop, state-level efforts like Colorado’s are taking on added importance, as regulators and industry stakeholders look to establish controlled, scalable frameworks for the sector.

Tennessee and the Rise of Alcohol-Like Regulation

Tennessee offers another model influencing Colorado’s approach.

Beginning in 2026, the state moved hemp-derived cannabinoid products under the oversight of its Alcoholic Beverage Commission, introducing stricter rules around potency, labeling, and distribution.

Regulating intoxicating hemp products through alcohol-style frameworks rather than treating them as unregulated wellness goods seems to be the most logical approach, one that increasingly requires compliance sophistication, supply chain discipline, and alignment with traditional beverage distribution systems.

A Market at an Inflection Point

The Colorado THC Beverage Coalition’s bill arrives at a pivotal moment for the industry.

On one hand, consumer demand for low-dose, sessionable THC beverages continues to grow, driven by wellness trends and declining alcohol consumption among younger demographics.

On the other hand, regulatory uncertainty—particularly at the federal level—is constraining long-term investment and product development.

States like Minnesota have demonstrated that regulated hemp THC markets can function safely and generate meaningful economic activity.

But without federal alignment, those markets remain vulnerable to disruption.

What This Means for Cannabis and Beverage Operators

For cannabis brands, the Colorado proposal could expand retail strategy beyond dispensaries into mainstream channels.

For alcohol and beverage companies, it’s an opportunity where THC-infused drinks could sit alongside beer, wine, and spirits in licensed venues.

And for policymakers, it raises the question of whether low-dose THC beverages should be regulated as cannabis, alcohol, or something entirely new.

Whether federal policy will allow that vision to materialize remains the defining question for the industry heading into 2026.

April 16, 2026

Operational Efficiency Is Driving the Next Phase of Cannabis Growth

By Ryan Hunter

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For years, the cannabis industry operated in an environment where expansion was the primary signal of success, and investors were excited to get involved. New markets opened, and rapid growth often took priority over efficiency. Companies could move quickly and sort out the details later, trusting that scale would eventually smooth things out.

That environment no longer exists, and in most ways, growth is now more challenging. Margins are tighter, investors are more selective, and competition has intensified. Those changes are forcing a closer look at how businesses actually perform beneath the surface to survive. Growing sales is crucial, but sustaining profitability and managing working capital over the long haul are essential to success.

This shift tends to start with cost visibility. To survive and thrive, cannabis operators must understand their product unit economics and the variables that influence them. In a compressed market, small inefficiencies have a way of compounding. A slight increase in input costs or a mismatch in pricing strategy can quietly erode performance over the course of a quarter.

None of this is theoretical. It shows up in day-to-day decisions around production, sales, marketing, and where to invest resources.

Growth strategy is evolving alongside that reality. Expansion into new markets still carries long-term value, but it is harder to justify without the infrastructure to support it. Entering a new market introduces layers of operational complexity, and success depends on more than securing shelf space. Distribution, retail relationships, and localized execution all factor into whether a brand actually thrives in a new setting.

For operators looking to grow without expanding into new states, there is a noticeable shift toward getting more out of the markets where they already exist. That means paying closer attention to sell-through, tightening product assortments, and making sure marketing efforts translate into repeat purchases. A company with products that consistently perform in one market is often more valuable than one that appears in five states but struggles to gain traction.

Marketing efforts must also be approached with greater intention. A strong brand identity still matters, but it is only one piece of a larger system. The more relevant question is whether a brand creates enough familiarity and trust to influence a decision at the point of sale. This intention requires a strategic approach to the entire brand story and customer journey, from initial awareness through repeat purchase, and a willingness to refine each stage over time.

Pricing is another area where the shift is easy to see. As competition increases and consumers become more selective, pricing strategies are under more scrutiny. Discounting can move products in the short term, but it can also establish consumer expectations in ways that are hard to reverse while shrinking already-thin margins. Operators are spending more time considering how pricing aligns with brand positioning, cost structure, and long-term viability. There is a balance between staying competitive and maintaining enough margin to support the business.

Product strategy is tightening as well. In earlier phases of growth, it was common to expand SKUs in an effort to capture more shelf space and appeal to a wider range of consumers. Over time, that approach can create complexity across production, inventory, and distribution. A more focused assortment tends to be easier to manage and often performs more consistently. Fewer products, supported by clearer positioning, can lead to stronger outcomes than a broad lineup that is difficult to sustain.

There is also a cultural component to this shift that is less visible from the outside. Teams are being asked to operate with a higher level of accountability and coordination. Decisions that may have once been made quickly are now examined more closely, with a better understanding of how they impact margins, operations and retail performance. This can slow things down in the short term, but it often leads to more durable systems over time.

The retail environment adds its own layer of reality. Budtenders remain one of the most influential forces in the purchasing process. Their recommendations carry weight, especially when consumers are choosing between products that look similar on the surface. Time spent building real relationships between brands and retail staff at the store level tends to produce more consistent results than broader, less targeted efforts. There is also a practical side to this. Regular field marketing presence in dispensaries, direct feedback from staff, and a clear understanding of how products are being positioned all contribute to stronger execution. It is not complicated, but it does require consistency.

The industry is continuing to mature, and the expectations are rising with it. There is less room for inefficiency and less patience for strategies that rely on momentum alone. Companies that stay close to their numbers, their customers, and the realities of the retail environment are finding a more stable footing. It is a more demanding phase for cannabis, but it is also one that rewards clarity and consistency in a way the earlier years did not.

January 16, 2026

States Are Still Missing The Mark On Social Equity

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Economist, Beau Whitney, released a report on the 2024 Cannabis Business Conditions and Sentiment Survey. It states that the legal cannabis industry remains structurally unprofitable for most operators—an issue that disproportionately impacts social equity entrepreneurs. The survey found that only 27.3 percent of U.S. cannabis businesses are profitable, while 40.6 percent are breaking even and 32.2 percent are operating at a loss. Profitability gaps are even more pronounced along racial lines: 33.7 percent of white-owned cannabis businesses reported being profitable, compared to just 17.5 percent of non-white-owned operators. Whitney attributes these outcomes to systemic barriers, including limited access to capital and banking, heavy regulatory compliance costs, and punitive federal tax policy under IRS code 280E, which can push effective tax rates above 50 percent.

The same story keeps repeating over and over again. States launch social equity grants with promises to provide financial, business, and technical support to equity applicants. Time and time again, lives are ruined and dreams broken because there isn’t adequate business planning support to mitigate the risk of failure.

BIPOCann Leads In Colorado

Founded in 2020 by Ernest Toney, Colorado-based incubator BIPOCann was created to address this gap, which he saw early in the rollout of social equity cannabis programs around the country, where many states were focused on license access, few invested in the long-term business planning, capital support, and operational infrastructure needed to help equity operators survive beyond launch.

BIPOCann works with minority and social equity entrepreneurs to support the full lifecycle of a cannabis business, from license applications and business planning to capital raising, operational setup, and product launch. Although the organization works with founders nationwide, its core programming is centered in Colorado through a partnership with the state’s Office of Economic Development. Beginning in 2022, BIPOCann helped pilot a model that paired state-issued social equity grants of up to $50,000 with structured mentorship, ecosystem introductions, and technical assistance designed to help founders avoid common pitfalls and accelerate time to market. The program has since expanded from an initial eight-week pilot to a 15-week accelerator, and in late 2025, BIPOCann secured its first state contract. In 2026, the organization expects to support up to 60 Colorado-based cannabis businesses through a year-long combination of structured programming and ongoing advisory services.

Four years into the program, BIPOCann can produce solid data on the efficacy of the program, says Toney, “We’ve worked with over 50 unique social equity licensed businesses and helped some get their doors open, expand throughout the state, expand to multiple states, and last year, a few of our participants were awarded about a quarter of a million dollars worth of investment funds.” He estimated that about 60% are license holders and 40% are service-based businesses seeking support from the BIPOCann program.

Toney also points to the advantages of launching a cannabis brand in a mature market like Colorado. With decades of legal market history, the state already has a dense ecosystem of established operators, retailers, and service providers, giving new brands multiple avenues to promote products and build distribution quickly. That existing infrastructure—from cultivation and manufacturing to storefronts and marketing channels—can shorten the path to market and reduce the typical early-stage friction. By contrast, while newer markets often generate significant excitement, Toney notes that brands entering those markets may face delays as foundational infrastructure is still being built, limiting immediate opportunities despite long-term potential.

Financing Remains The Biggest Obstacle

Access to capital remains the most persistent barrier for social equity entrepreneurs. Investment opportunities have largely dried up over the past several years, particularly for first-time founders who lack operating history or personal wealth to self-finance early stages.

Toney says BIPOCann places heavy emphasis on financial literacy, pitch development, and helping founders clearly communicate their brand story. “Ultimately, we want them to be in a position where, at the end of the program, they have a pitch deck to approach angel investors or friends and family,” he says. “Even better is when they can show revenue history to demonstrate business capability.”

The program relies heavily on experienced cannabis professionals who volunteer their time to mentor participants and share real-world operational expertise. That peer-driven support, Toney says, often fills gaps left by state programs that stop short of providing ongoing guidance.

It is unclear why states continue to repeat the same mistakes. Program after program has failed to meaningfully support social equity entrepreneurs beyond the point of licensure. States need to partner with organizations like BIPOCann to implement comprehensive business training programs with ongoing operational oversight, more closely resembling how venture capital firms engage with portfolio companies. Capital alone is not enough.

Learn From Past Mistakes

Even in states that have touted early social equity wins, the outcomes have fallen painfully short. New York, for example, successfully awarded roughly 54 percent of adult-use licenses to social equity applicants, but its promise to deliver turnkey storefronts and meaningful financial support ultimately unraveled. The state’s reliance on public-private partnerships, including DASNY and private investment partners, led to delays, cost overruns, lawsuits, and allegations of misconduct tied to how funds were allocated and how executive compensation was structured. For many licensees, the result was months or years of uncertainty rather than the operational head start they were promised, leaving some entrepreneurs carrying rent, legal fees, and licensing costs without ever opening their doors.

California offers another cautionary tale. While the state has distributed hundreds of millions of dollars in social equity grants through local jurisdictions, the support has been uneven, slow to reach operators, and heavily dependent on municipal capacity. Many equity entrepreneurs report receiving funds after critical startup windows had already passed, or without the technical assistance needed to deploy capital effectively.

In Richmond, California, a local equity program illustrates how these breakdowns play out at the municipal level. As reported recently, the city returned more than $1.1 million in state cannabis equity funding after failing to meet reporting requirements, while a separate $600,000 grant allocation has remained stalled, leaving qualified equity applicants waiting more than a year for promised support. In some cases, California grant dollars have helped cover rent or fees, but they have failed to address deeper challenges, such as cash flow management, compliance costs, access to the supply chain, and long-term business sustainability in one of the country’s most competitive cannabis markets.

These failures are too common across state and local equity efforts. Access to capital without execution, accountability, or ongoing operational support is not equity. It is a system for failure. States need to partner with organizations like BIPOCann that work hand in hand with entrepreneurs to build viable businesses, not just issue licenses and grants.

September 1, 2023

Alternatives to Bankruptcy for Cannabis Companies: Part 2

By Brent Salmons, Yuefan Wang

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Part 1 of this series discussed the lack of bankruptcy protections for cannabis companies, since bankruptcy in the U.S. is an exclusively federal procedure and cannabis remains illegal under federal law and proposed a number of alternative options for businesses struggling in the current environment. Part 2 of this series focuses on one of these alternatives: state law receiverships.

Background

A cannabis operation facing financial difficulties may try to avail itself, on the one hand, of the contractual remedies described in Part 1 of this series, but these remedies may be flimsy given their narrow scope and reliance on voluntary negotiation between parties whose relationship is already likely tense; on the other hand, the statutory remedies described in Part 1 of this series may be too rigid and absolute, necessitating the disposition of a business as a collection of assets, instead of its continued operation as a going concern. An alternative is receivership, a flexible but powerful quasi-judicial approach paralleling federal bankruptcy able to be administered by state courts. Compared to federal bankruptcy, state receivership is both over and under-inclusive: while receivership can be used in many more situations than insolvency, such as a financially healthy business that is nonetheless subject to regulatory action, receivership provides less comprehensive protection for an insolvent business.

Receiverships have their roots in English and Welsh courts of equity, which were seen as offering fairer remedies than their contemporary common law courts, bound as they were by ponderous precedent. In contrast, courts of equity had more discretion to apply remedies which could be more tailored and “equitable” to an individual petitioner, even if such remedies were not codified. While this separation of equitable and common law courts does not generally exist in the modern U.S. legal system (except for a few hold-out states, most notably, Delaware), the legacy remains in the type of civil remedy available: while most remedies are awarded as monetary redress for a past wrong suffered by a plaintiff (e.g. liquidated damages for the discloser of confidential information or the “benefit of the bargain” for the seller of a company), equitable remedies often require prospective action (or forbearance of an action) by the defendant (e.g. an injunction on disclosure by a recipient of confidential information or specific performance by a purchaser of a company). To draw the analogy out, bankruptcy is a “legal” process to address insolvency since it is governed by a comprehensive regime of federal statutes and rules in the Bankruptcy Code (which is, ironically, applied by specialized federal courts), while receivership is the “equitable” side of the same coin: a judicially-created remedy to manage or liquidate a business, among other actions, where it would not be equitable (or, most importantly for cannabis businesses, not possible) for a bankruptcy action.

Some states with legalized cannabis have cannabis-specific receivership statutes, usually providing that the receiver either be temporarily or fully licensed similar to any other operator of a cannabis business.As an equitable remedy used by various states and federal entities, generalizations about the receivership process are difficult to make. However, broadly speaking, a typical receivership process begins with a complaint filed against the entity for which receivership is sought in state court. This filing can be made by a variety of parties outside of the standard debtor-creditor relationship (reflecting the equitable nature of receiverships), including by regulators and disputing owners of a business. After this filing, a motion to appoint the receiver (which is usually but not always a third party) is filed with the court; consent of the opposing party is generally not required in appointing a receiver but can often make the process easier. The complainant must then establish standing and the occurrence of certain events, including insolvency, but also mismanagement of a corporation or a foreclosure. The requirements of such events are fact-specific and may often be governed by statute or the contractual relationship between parties. The order appointing the receiver usually sets out the specific powers the receiver has in any given case to oversee the disposition or operation of the assets subject to the receivership (called the “receivership estate”) for the benefit of its’s creditors.

Receivership laws generally fall into two categories: some states provide for a broad general statute, sometimes accompanied by statutes specific to industries which are heavily regulated, entity types, or process, while in other states the power is an extension of the court’s powers, set forth in the state’s rules of civil procedure. States also differ as to whether a receivership is considered an independent remedy, a standalone legal action which can be pursued in and of itself (e.g. a petition by a creditor to appoint a receiver to resolve settle an unpaid debt), or an ancillary remedy, a legal action that supports a primary claim (e.g. a request to appoint a receiver in connection with a dispute over the ownership of a business). Some states provide for general receiverships, which allows receivers to take control of an entire business, while other states also allow limited receiverships, which allows the receiver take control of a portion of a business, while the owner operates the remainder. Some states with legalized cannabis have cannabis-specific receivership statutes, usually providing that the receiver either be temporarily or fully licensed similar to any other operator of a cannabis business.¹

Below is an overview of the laws and rules governing receiverships in certain states which have legalized cannabis.

Arizona
In Arizona, receivership is governed by statute, with a general statute and specific statutes for certain industries and type of receivership. Arizona law recognizes that principles of equity apply to all matters relating to receivers, providing the court overseeing the receivership with additional power to decide the remedies available to the receiver. In addition, Arizona has enacted a specific statutory framework for the appointment of receivers for commercial real property and personal property related to or used in operating the real property. Arizona also uses a separate receivership statute to provide for corporate dissolution receiverships, in which a court in a judicial corporate dissolution proceeding may appoint one or more receivers to wind-up, liquidate, or manage the business and affairs of the corporation.

There are no specific statutes governing receiverships of cannabis businesses, so the general receivership statute applies to cannabis businesses, subject to Arizona’s rules governing the operation of a cannabis business. For example, Arizona cannabis regulations that require anyone volunteering or working at a medical or recreational cannabis dispensary to be registered with the cannabis regulator similarly apply to a receiver appointed over a licensed cannabis business.

California

California does not have significant entity-specific or industry-specific statutes for receiverships; rather a California court’s power to appoint a receiver is granted under the state’s rules of civil procedure. Receiverships in California are solely an ancillary remedy; a receivership is commenced once a complaint is filed and any party to the action may seek to appoint a receiver. Circumstances that allow for the appointment of a receiver are fact-specific and at the discretion of a judge, although contractual provisions for the appointment of a receiver are given weight under the rules. Sales of assets in the receivership estate must be submitted to, and approved by, the appointing court.

While the rules of civil procedure provide for the general powers of a receiver, the specific powers a receiver possesses in any given case is granted by the judicial order appointing the receiver; this appointment order is therefore, along with the court itself, the primary authority for the parties in any given receivership. California explicitly disqualifies certain persons, such as parties to the lawsuit, an attorney of a party, a person interested in an action, or any person related to any judge of the court within the third degree, as receivers.

While California’s receivership rules do not explicitly contemplate cannabis businesses, receiverships for cannabis companies have taken place, but in our experience are less common in California than assignments for the benefit of creditors (which we will address in a later article). Like other licensed businesses in California, cannabis companies must provide notice to the state regulatory agency which granted the license. It is up to the agency’s discretion whether the business may be operated under the existing license or whether the receiver must secure a new or temporary license.

Colorado

Like California, no generally applicable receivership statute exists in Colorado; instead, receiverships are governed by the state’s rules of civil procedure. Under these rules, a receiver can be appointed under a court’s general equitable powers. Appointment of a receiver is an independent remedy in Colorado, but is contingent on a lawsuit having commenced and the court having deemed the receivership as necessary and proper. In addition to the court’s general equitable powers to appoint a receiver, and unlike California, Colorado has receivership statutes that are entity and industry specific. The entity-specific statutes permit the appointment of a receiver for the judicial dissolution of for-profit corporations, non-profit corporations, limited liability companies, and cooperatives, and the industry-specific statutes permit the appointment of a receiver for the windup of failed insurance companies and the closure of long-term care facilities.

Similar to California, the court order appointing a receiver governs the entire receivership process and any disposition of the assets of the receivership estate must be submitted to and approved by the court.

As befitting the first state to legalize adult-use cannabis, Colorado’s cannabis regulations specifically address receiverships: the rules create a notice and application requirement for all court appointees, including receiverships, and require receivers to register with the regulator as a “temporary appointee” of the court.

Illinois

Illinois does not have a comprehensive receivership statute; instead, the state has industry-specific statutes, including for regulated industries such as nursing home facilities and telecommunication carriers. Illinois also provides for “equity receiverships”, which are used as an ancillary remedy in business disputes in order to stabilize a business that is adversely affected by fraud, neglect, waste, dissipation, or other misconduct during the pendency of the underlying proceeding. If the underlying matter is within the general or statutory jurisdiction of the court, then such court has jurisdiction over the receivership.

There are no specific statutes governing receiverships of cannabis businesses, but the governing statute does contemplate operation of a cannabis business by a receiver, so regulations promulgated thereunder should apply to receivers as well, including with respect to licensing.

Maryland

Adult-use cannabis sales only began in Maryland July 1, 2023. Maryland has a general receivership statute.

Receivers in Maryland are generally appointed by the person seeking appointment, including the court, and must meet certain qualifications, such as not having any material financial interest in the outcome of the receivership, and not having any debtor-creditor relationship with or equity interest in any party to the receivership. While the general receivership statute provides for broad powers of the receiver, including general management of receivership property, hiring professionals, and issuing subpoenas, the court may modify or expand the powers of the receiver via the appointment order.

While there is no cannabis-specific receivership statute, Maryland’s medical cannabis rules contemplate and authorize the transfer of licenses to a receivership; similar rules have been proposed for adult-use cannabis licenses as well.

Nevada

Nevada has a broad receivership statute, in addition to both entity and industry specific statutes. Case law is not well-developed and mostly predates the current statutory scheme, but there is support for a receiver being appointed outside of a statutory context, specifically when the situation is governed by contractual agreement.

The general receivership statute provides that a receiver may be appointed in a variety of situations, such as fraudulent property purchases, foreclosure of mortgages, or the dissolution or insolvency of a corporation.

Nevada has a statutory regime for receiverships for cannabis companies. Unlike the general statute, there are significant requirements for who can be a receiver for a cannabis business. A receiver must first secure a cannabis establishment agent registration card for a cannabis receiver issued by Nevada’s cannabis regulator. In addition, the receiver must submit an application to the regulator accompanied by, among other requirements, a statement saying the receiver has not previously had an agent registration card revoked. The receiver must also provide proof that she has (1) experience or knowledge of the cannabis industry, (2) experience as a receiver appointed by a court, (3) knowledge and skills necessary to make reasonable financial decisions, and (4) adequate financial capacity to fulfill the duties of a receiver. If the regulator is satisfied with the receiver’s application, it will issue the receiver an agent registration card which must be renewed two years after issuance. It is worth noting that Nevada’s statute governing the non-transferability of certain agent registration cards for cannabis allows the regulator to adopt regulations that give priority in the processing of transfers of licenses for transferors subject to receivership. To date, however, no such regulations allowing priority for receivership processing have been adopted.

Washington

Washington has a general receivership statute, but not any entity or industry-specific receivership statutes. Washington’s receivership structure with overhauled in 2004 with the passage of a new law, so it is not completely settled whether receivership is now an independent or ancillary remedy; however, the language of the statute language suggests that it is an independent remedy.

To be appointed a receiver in Washington, the individual must meet certain requirements, including not being a party to, or be closely controlled by a party to, the underlying action and not having materially adverse interest to the person against whom receivership is sought. The general statute specifically outlines the powers of the receiver. Certain actions by the receiver require court approval before being finalized, including the assumption or rejection of executory contracts, and sales of property outside the ordinary course of business.

Washington law specifically provides for receiverships for cannabis companies. To be a receiver, the person must satisfy the requirements of Washington’s receivership law, and either be preapproved by the cannabis regulator or else be approved post-application. In order to qualify for the regulator’s preapproved receiver list, or be approved post-application, the putative receiver must (1) submit an application, (2) have been a Washington resident for at least six months prior to submission, (3) submit to and pass a criminal background check, (4) provide financial disclosures as requested by the regulator, and (5) disclose any interests in the cannabis licensees. Once a person is appointed as receiver for a cannabis licensee, she shall not have a financial interest in, or simultaneously serve as receiver for, another licensed cannabis retailer. The receiver may not also serve as a receiver for, or be a party of interest in, more than five cannabis retail licensees or more than three cannabis producer and/or processor licensees at the same time. Finally, any person who files a receivership action involving a cannabis licensee must provide notice to the regulator.

Part 3 of this series on Alternatives to Bankruptcy for Cannabis Companies continue our review of receivership in various states and other bankruptcy alternatives, including assignments for the benefit of creditors.

Reference

As cannabis legalization continues to spread, more robust industry-specific receivership rules may be promising given the heavily regulated and specialized nature of the business, similar to how a number of states have industry-specific rules for other heavily regulated industries.

April 25, 2023

SC Labs Expands, Acquires C4 Laboratories

By Cannabis Industry Journal Staff

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According to a press release published on Monday, SC Labs has acquired C4 Laboratories, a cannabis testing lab located in Scottsdale, Arizona. The acquisition means SC Labs has expanded their footprint into five states total. Originally based in California, the cannabis testing company now has locations in Arizona, California, Colorado, Michigan and Oregon.

Ryan Treacy founded C4 Laboratories and has been a vocal advocate for product safety testing since 2016. As CEO of the company, he led the laboratory through regulatory upheaval and a lot of changes the state has seen since legalization. He also co-founded the Arizona Cannabis Laboratory Association and led lobbying efforts on behalf of patients and stakeholders to require lab testing.

He says they are excited to join forces, becoming the largest cannabis testing platform in the US. “Our combined leverage of top scientists with specialized cannabis testing knowledge and a leadership team of industry experts will allow us to do everything from harmonizing R&D efforts to improving the data experience to pushing for positive regulatory change,” says Treacy. All current employees of the C4 team will stay on, joining the new SC Labs team.

This acquisition represents another important milestone for the SC Labs expansion plan. Last year, they hired a new CEO, Jeff Journey, and launched their national hemp testing partnership based in Colorado. That, coupled with the expansion through Can-Lab into Michigan last year along with the C4 acquisition, SC Labs has expanded into three new states within the last twelve months.

Journey says they’re thrilled to acquire the C4 team and that they have shared values, a proven track record and good expertise. “With this acquisition, we can continue to expand best-in-market cannabis testing services and the opportunity to service multi-state growers and manufacturers,” says Journey. “It is truly an exciting time for growth, and we know that the C4 team will be an invaluable addition to our team, culture and operations.”

November 9, 2022

A Q&A with Sundie Seefried, President & CEO of Safe Harbor Financial

By Cannabis Industry Journal Staff

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As the former CEO of Partner Colorado Credit Union (PCCU), Sundie Seefried has been in the credit union space for 39 years. Established in 2015, Safe Harbor Financial is now a leading provider for banking and financial services in the cannabis industry.

Seefried founded Safe Harbor as a cannabis banking program for PCCU, and since then it has withstood scrutiny of 16 separate federal and state exams. Entering its ninth year as a cannabis banking program, they have almost 600 accounts in 20 states and have processed over $14 billion in transactions for the cannabis market. In September, Safe Harbor began trading on Nasdaq under the symbol SHFS. The company has also announced a definitive agreement to acquire Abaca, an industry-leading cannabis financial technology platform.

Seefried has seen it all in the cannabis banking world. We wanted to get her thoughts on some current events, the future of cannabis banking and lending, and what the next few years might hold in store for an industry ready to grow.

Cannabis Industry Journal: Tell us a bit about yourself. What is your background and how did you find yourself in the cannabis industry? How did you get to become president and CEO of SHF?

Sundie Seefried: I’ve been in banking in the credit union space since 1983. I became CEO of Partner Colorado Credit Union in 2001 and stayed there for 21 years. Everything I do, I have a very conservative nature just from being in the banking world and doing things methodically and building good foundations that endure long term. In 2014 when FinCen issued guidance, I was supposed to retire, and I had dinner with some old friends that were attorneys who couldn’t get bank accounts for their clients in the cannabis industry. They asked me to help and I looked into it for them. I assumed the regulator would shut me down but he didn’t; he actually encouraged me to move forward and look further into things. As I educated the board, we saw just how unsafe Colorado was and the serious need for the community to figure things out with respect to banking and cannabis. Coming from that credit union perspective, I said I think we can do this, let’s try and I’ll go through the third parties necessary. And that’s how we got into this, just looking to try and help solve Colorado’s problems and get banking access for cannabis companies.

CIJ: Tell me about your company’s mission. What is your financing strategy in cannabis and of the companies you do business with, what do you look for most?

Seefried: Our mission remains the same, and that is to normalize banking in the cannabis industry as much as possible. Because the black market still exists, the issue becomes sorting the legal entities out from the illicit actors in the industry. We know that the illicit market is trying to hide amongst the legal environment, which really makes things difficult for upstanding cannabis businesses. We can normalize banking by making sure we help legitimize the compliant entities and sort out the bad actors. We really only want to work with legitimate players with licenses, who are fulfilling expectations on the regulatory level and have no problems with compliance. We have been able to do that on the depository side.

We have always been a low-cost provider and our clients count on that. As we move into the lending part of the industry, we’re looking to do the same thing. There are lenders who charge one-to-three percent per month, 18 to 36 percent per year. We, on the other hand, are targeting more of an eight to thirteen percent annual rate. More of a conservative approach. Real debt underwriting. No extremely high interest rates. We look for the collateral, we look for well-organized businesses and solid documentation. Those are the businesses we are trying to bring into the fold and offer them normal loans. Cannabis will always have a premium on it simply because it is illegal at the federal level and there are additional hoops we have to jump through. Because of the potential forfeiture and seizure, if there are bad actors, etc., it really behooves any clients coming to us to also place their depositary services with us so we can prove their legitimacy and provide loans to them.

CIJ: Let’s talk about the Canopy Growth news. They announced they are pulling the trigger on acquiring Wana Brands, Acreage Holdings and Jetty Extracts, under the Canopy USA holding company and ahead of federal legalization. On the surface, it looks like they are bypassing a lot of the hurdles American cannabis companies currently face with financial red tape. As a foreign company trading on the NASDAQ dealing with a schedule 1 substance, do you expect Canopy to have a significant, some would say unfair, competitive advantage with their early entry? Or is this perhaps more of a rising tide lifting all boats scenario? What effect will this have on the current market landscape?

Seefried: I find it a very interesting move on their part. Certainly, they have a big advantage in comparison to other companies. The consolidation in the industry is moving so quickly. Other players will keep up with this just as fast as Canopy is moving in. That’s my opinion in terms of what I see in the consolidation area of the market. I think what it really hurts is small businesses. My heart goes out to them. So many of them worked so many years to build excellent small companies with boutique shops, and this whole move will really change that part of the industry.

I see a lot of these small players, non-vertically integrated companies, being impacted in a negative way due to such mass consolidation and the entry of foreign businesses. We need to get more competitive on a global level in order for our companies to grow and thrive. This happened back in 2018, when so many companies started doing those reverse takeovers onto the Canadian Securities Exchange and suddenly, they were putting tens of millions of dollars into the U.S. market. People didn’t see that as a competitive disadvantage for American companies, but now this move by Canopy may really show that we have to look at things more globally.

CIJ: Biden’s announcement regarding the scheduling review for cannabis has a lot of industry folks very hopeful that federal legalization is closer to a reality than before. Do you share their optimism?

Seefried: Closer than before, yes. But how close? I am not convinced it will happen quickly. If they are really going to consider rescheduling or descheduling, everything happens in Washington very incrementally. Eight years and seven attempts at the SAFE Banking legislation and still no movement on that front. Tomorrow, we’re going straight to legalization? I have a hard time swallowing that one. I just don’t see that big of a jump all at once. I think it is interesting coming just before the midterms and votes are really needed now more than ever.

What Biden did was a great start. Especially for those people in prison for possession. The interesting part of it is, we are very serious about people who have used it, but the people who have sold it and are in prison might be in the same situation. Given how the laws worked for so long, just based on the amount of cannabis you had could get you automatically labeled as a dealer, which isn’t the case for a lot of incarcerated folks.

The fact is, the social equity and justice issue, who do you free or who do you not free from prison, is a very difficult issue to get through. I think it is a great step forward and it will help some people who were treated unjustly, but there is still a lot of work to be done.

“I believe we’ll start seeing pressure from the global market on the United States to move things along a little faster in our own country.”As far as rescheduling, if they go from a Schedule I drug to a Schedule II drug, that will do no good, but it certainly is a bone to throw to the industry if you want to look like you are making some progress. Schedule II is still subject to 280E tax code so it will only do so much. If they want to make things more equitable and actually level the playing field, they have to do something about the 280E issue hindering every cannabis business in the country.

As far as full legalization, I am not optimistic because of all the players that need to be involved. Full legalization will require a change to the IRS tax code 280E as well as other tax issues. I think there are too many players: The DOJ, FinCen, the DEA, the FDA, the IRS. All of these agencies will have to agree on full legalization and moving forward in unison. The DEA is trying to fight illicit actors and illicit drugs. FinCen is trying to follow the money to find illicit actors. As long as there is an illicit market it will make their job tough, and on top of all of that, we have politics in play. That is just my take on legalization. It is going to be a much more complex problem than just legalizing the plant and moving on. Rescheduling seems like lower hanging fruit, but they will have to move it higher than a Schedule II.

CIJ: With the midterm elections here, there are a number of legalization measures in a handful of states, along with political control of Congress on the ballot. How do you think a Republican or Democrat controlled Congress will affect cannabis legalization progress?

Seefried: I just finished doing some lobbying in September in DC and spoke to some Senator offices in person, and I heard a lot of interesting topics being discussed. One of the things that keeps popping up is that social equity and justice is a huge issue. If we can’t solve this injustice in our system that has been going on for decades and decades, maybe they’ll hold banking legislation hostage. You can’t correct 50-60 years with one piece of legislation. Everything has to be incremental, unfortunately, so there will be some give and take there. I think that was a primary focus, especially with the Democrats and I do think it is a worthy cause.

On the Republican side, economically improving our competitive advantage as a country. They are starting to see the jobs being created and the tax revenue coming in and the growth of the industry. They will have to make that decision at some point in time whether they are going to leave the American cannabis industry behind or allow them to compete on a global level. I really think everything will move slowly and continue as it has happened in the past.

I believe we’ll start seeing pressure from the global market on the United States to move things along a little faster in our own country.

CIJ: As we inch closer to 2023, what do you expect the next year to offer for the cannabis financing market?

Seefried: I would say, with or without legislation, they’re finding greater access to banking. And the reason they are getting better access to banking is because none of us have been prosecuted for simply engaging in cannabis banking. I think we have set a precedent over the past eight years, not only us but other service providers in the industry and that we are not being prosecuted.

I see more financial institutions entering the market slowly. The second reason access to capital and banking will increase is because every financial institution in the country wants that lending relationship. In order to get there, they want to start with the depository relationship, and they don’t want smaller players presently doing it and getting all of those relationships before they enter the market. I think the competitive nature of the financial industry to land that lending relationship is going to force them into the game sooner than later.

July 5, 2022

SC Labs Continues National Expansion

By Cannabis Industry Journal Staff

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According to a press release published last week, SC Labs is in the midst of a multi-state expansion under new leadership. The company hired Jeff Journey as their new CEO, coming from a VP position at Thermo Fisher Scientific.

Last year, in what seemed like an initial move to establish the lab on a coast-to-coast level, SC Labs developed a hemp testing panel that covers a number of contaminants on a national regulatory level. The hemp testing panel they developed purportedly meets testing standards in states that require contaminant levels below a certain action limit.

Then in February of this year, the company announced a partnership with Colorado-based Agricor and Botanacor Laboratories, with the goal of establishing a national testing network, offering comprehensive cannabis and hemp lab testing. All three of those organizations are certified by the Colorado Department of Public Health and Environment (CDPHE) for compliance testing required for hemp products.

In the press release that was published last week, they hinted at another announcement coming soon: a new partnership with Michigan-based Can-Lab. This, coupled with hints at further expansion and their current presence in California, Colorado and Oregon, means Journey will have his hands full and his sights set on nationwide cannabis testing.

“We’re looking forward to partnering with cannabis and hemp brands at every stage of the supply chain to share our innovative and forward-thinking scientific expertise so they can deliver safe products to the marketplace,” says Journey. “As cannabis legalization expands across the country, the testing industry is rapidly shifting and scaling to meet both market and regulatory demands.”

The leadership team will still have a few familiar faces, such as Jeff Gray as chief innovation officer and Josh Wurzer as chief operating officer. “The most important assets we can offer as a multi-state operator are scientific expertise, financial stability, and unquestionable integrity, the principles on which SC Labs has long stood for and will continue to provide to our valued customers,” says Journey.

June 22, 2022

CDPHE Certifies More Labs for Hemp Testing

By Cannabis Industry Journal Staff

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Aurum Labs, a cannabis testing laboratory based in Durango, Colorado, announced last week that they have become certified by the Colorado Department of Public Health and Environment (CDPHE) for all of the compliance testing required for hemp products. The press release says they are the first independent lab that is actually based in the state to receive the CDPHE certification for every compliance test.

Last year, Colorado rolled out hemp testing regulations that are some of the most comprehensive in the world. The required pesticide screening includes testing for more than 100 different types of pesticides. The new rules, along with the certification requirement, make it difficult for labs to enter the market, with only eleven total labs certified by the CDPHE for various hemp compliance panels and only five certified for every type of test, according to the department’s website.

Most of the companies on that list certified to conduct hemp compliance testing are familiar labs with large footprints, such as Eurofins, Kaycha Labs, Columbia Labs, SC Labs, InfiniteCAL and ACS Labs. Most of these labs are out of state and by the looks of it, only four independent, Colorado-based labs are certified so far: Aurum Labs, Gobi Analytical, Botanacor Labs and Minova Labs. Gobi and Minova, however, are not yet certified for pesticide testing, while Aurum appears to be certified for all compliance testing. Botanacor Labs, based in Denver, was certified back in June of 2021 to every compliance test except for pesticides.

“It’s difficult to compete with these large, private-equity-funded labs, but Aurum is passionate about serving the evolving hemp industry” Liz Mason, director of operations at Aurum Labs, said in a press release. “We are committed to staying on the scientific forefront to give the most comprehensive services to our clients.”

April 20, 2022

Biros' Blog

Happy 4/20, Blaze On!

By Aaron G. Biros

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Happy 4/20! The cannabis holiday with unclear origins is today and with it comes hundreds and hundreds of marketing and story pitches landing in every journalist’s inbox. Some of those pitches are impactful, some lack substance, some celebrate anniversaries, most offer discounts and sales and some are truly bizarre.

Every year, April 20th marks the cannabis holiday that people around the world celebrate with copious amounts of cannabis, concerts, festivals, deals, sales and marketing gimmicks. This year, here are some noteworthy (and weird) happenings going on as we celebrate the wonderful plant that brings us all together:

Leafly rings in the holiday on the NASDAQ: Leafly CEO Yoko Miyashita, surrounded by her colleagues, rang the opening bell for the NASDAQ Stock Exchange. The company began publicly trading on the NASDAQ as ‘LFLY’ back in February.

Smoke em if ya got em: Leafly CEO Yoko Miyashita, surrounded by her colleagues, rang the opening bell for the NASDAQ Stock Exchange

Americans for Safe Access (ASA) turned twenty on April 19: The policy, action and advocacy organization has been influential in passing medical cannabis laws throughout the country for twenty years now. The organization has trained thousands of public defenders, worked with thousands of incarcerated medical cannabis prisoners, organized protests all over the country, worked with regulators in dozens of states to pass safety rules, published reports, launched their Patient Focused Certification program and much more. Happy birthday ASA!

Emerald Cup and SC Labs celebrate thirteenth anniversary: The couple has been together now for thirteen years, with the Emerald Cup heading into their eighteenth annual competition next month. For the past thirteen years, Santa Cruz-based SC labs has worked with the Emerald Cup as their official testing partner, verifying COAs for potency and purity, gathering data on terpenes and classifying products and strains. Happy anniversary you two!

Smoking’ sandwiches: The cannabis-inspired, Arizona-based sandwich shop chain Cheba Hut celebrates the holiday with $4.20 “nugs” (pretzel nuggets) served on a frisbee and two PBRs for $4.20.

NORML stays busy: Executive Director Erik Altieri called for reforms in a press release: “While we have undoubtedly made immense progress in recent years, hundreds of thousands of our fellow citizens are still arrested each year for simple possession of a plant. That is why we are calling on all Americans to take time out of their day on 4/20 to help us finish the fight, both at the federal level and in those states that still are living under the dark ages of prohibition. We have an overwhelming mandate from the people and we intend to make sure that elected officials abide by it.”

New Jersey, a day late and a dollar short: The Garden State will begin adult use sales on April 21st at thirteen dispensaries. The delays, licensing process and regulatory hurdles have created confusion and frustration for the industry, but the state is moving forward with their plan and dispensaries will serve adults over 21 tomorrow, a day after the holiday.

Cannabis-infused Mac and cheese, a dangerously cheesy combination.

Sluggish Senate: The SAFE Banking Act has passed the House six (six!) times so far, most recently in February of this year. Sen. Cory Booker has long said he opposes the cannabis banking bill without wider legalization legislation (say that six times fast). Sen. Chuck Schumer also announced last week that his cannabis bill introduction is delayed. The CAOA won’t come until August now he says.

Cannabis Cuisine: Celebrity chef Todd English curates a “cannabis-curious cuisine” with infused Mac & Cheese via LastLeaf.

Erotic infusions: This CBD company offers 20% off their infused lubes, massage oils and products with code oOYes20. OoYes! CBD Lube is a female-founded formulations company focusing on the sex positive, “cannagasmic” hemp-derived CBD products space.

Backwards down the number line: Phish plays their first night back at Madison Square Garden in New York for a four-night run. Correctly guess the opener for tonight in the comments below and win a free beer and a burger with me at this year’s Cannabis Quality Conference & Expo.

That’s all folks! Thanks for reading and blaze on!

Blast from the past: Here’s a little treat if you’ve made it this far. This is me ten years ago today (back in college), smoking a joint on April 20, 2012. Time flies.

March 27, 2022

Cresco Labs To Acquire Columbia Care

By Cannabis Industry Journal Staff

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According to a press release published last week, Cresco Labs has come to an agreement with Columbia Care Inc. to acquire the company. The $2 billion deal, expected to close in the fourth quarter of 2022, will create the largest multi-state operator (MSO) in the country by pro-forma revenue.

Cresco Labs is already one of the country’s largest MSOs with roots in Illinois. With a footprint covering a lot of the United States, their brands include Cresco, High Supply, Mindy’s Edibles, Good News, Remedi, Wonder Wellness Co. and FloraCal Farms.

Columbia Care is also one of the largest cannabis companies in the US, with licenses in 18 jurisdictions and the EU. They currently operate 99 dispensaries and 32 cultivation and manufacturing facilities. Their brands include Seed & Strain, Triple Seven, gLeaf, Classix, Press, Amber and Platinum Label CBD.

Under the agreement, shareholders with Columbia Care will receive 0.5579 of subordinate voting share in Cresco for each common share they hold. Columbia Care shareholders will hold approximately 35% of the pro forma Cresco Labs Shares once the deal goes into effect.

Coming out of the deal, Cresco’s total revenue will hit $1.4 billion, making it the largest MSO in the country. Their footprint will reach 130 retail dispensaries across 18 different markets. The companies already have the largest market share in Illinois, Pennsylvania, Colorado and Virginia and are of the top three market shares in New York, New Jersey and Florida, which gives them unique opportunities to capitalize on emerging adult use markets.

Charles Bachtell, CEO of Cresco Labs, says the deal is very complementary and they are excited about long-term growth and diversification. “This acquisition brings together two of the leading operators in the industry, pairing a leading footprint with proven operational, brand and competitive excellence,” says Bachtell. “The combination of Cresco Labs and Columbia Care accelerates our journey to become the leader in cannabis in a way no other potential transaction could. We look forward to welcoming the incredible Columbia Care team to the Cresco Labs family. I couldn’t be more excited about this enhanced platform and how it furthers the Cresco Labs Vision – to be the most important and impactful company in cannabis.”