Federal Judges are not showing an acceptance to cannabis businesses when it comes to declaring Bankruptcy.
With the large amount of overhead needed to fund commercial producer processors, investors must be worried when they hear this news. With all businesses there are risks, and you never know when a legal issue or a recall may destroy your cashflow and put you out of businesses. Many investors are expecting an amazing return on their investment within the first 6 months of production, but many times that ROI just isn’t there with the mounting competition. Now to scare investors away more than the banking issue is this ruling by U.S. Bankruptcy Court in Denver.
Judge Howard Tallman dismissed the case citing that the business operated outside of federal regulations. He has also dismissed other cases in the past involving a company that wasn’t even technically involved in the production of cannabis, but they did rent part of their space out to a tenant that cultivated marijuana.
Bankruptcy is supposed to be a second chance and influence people to start ventures in the name of capitalism, but what if bankruptcy wasn’t an option? Would people still venture? Would VC fund it? Would private investors stick to the stock market? Only time will tell. Visit your local pot shop and thank them for all of the risks they have assumed!
Read More: No Bankruptcy for Marijuana Businesses