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Anticipating a Cannabis Receivership: Key Insights from the CRA Annual Conference

CRA Annual Conference 2025 | St. Louis
Panelists: Brent Salmons (Husch Blackwell), Jean Smith-Gonnell (Troutman Pepper Locke), Daniel Garfield (Fairfield & Woods), Matt McKinlay (Ampleo)
Moderator: Lacey Bryan (Markus Williams Young & Hunsicker)

Cannabis panel 2025

Introduction

The rapidly evolving cannabis industry presents both opportunities and challenges for professionals involved in restructuring and receiverships. At the CRA Annual Conference 2025, industry experts convened for a panel discussion titled “Anticipating a Cannabis Receivership.” The session explored regulatory complexities, business risks, and strategies for navigating one of the most complicated and highly regulated sectors in today’s economy.

The Legal and Regulatory Landscape

Panelists began by addressing the patchwork of state-level regulations that define cannabis operations across the United States. Licensing requirements vary dramatically from state to state, and compliance missteps can jeopardize an organization’s viability.

Adding to the complexity, federal bankruptcy protections remain largely unavailable to cannabis businesses due to ongoing federal prohibition. This forces companies in distress to seek alternatives such as receiverships, out-of-court workouts, or state-specific remedies

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The Role of the Receiver

A cannabis receivership requires specialized expertise and careful navigation of the legal environment. Key considerations include:

  • Partnering with an experienced cannabis attorney to interpret state-specific regulations.

  • Communicating directly with attorneys general and state governing bodies overseeing cannabis operations.

  • Managing tax debts and compliance obligations.

  • Ensuring appropriate professional liability insurance in a field where risks are heightened

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Unlike receiverships in federally legal industries, cannabis receiverships demand additional oversight to maintain compliance while preserving business value.

Common Pitfalls in the Cannabis Sector

Panelists outlined the recurring issues driving cannabis companies into distress:

  • Ponzi-like investment schemes in mature markets.

  • Overconfidence and poor planning among so-called “CannaBros.”

  • Lack of operational maturity and business sophistication.

  • Widespread regulatory compliance failures.

  • Unpaid taxes and poor financial management.

  • Proliferation of scams and bad actors targeting inexperienced operators

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These pitfalls highlight the need for both receivers and industry stakeholders to anticipate problems before they escalate into insolvency.

Valuation and Business Recognition

The value in a cannabis business often depends on its regulatory environment. In limited-license states, licenses themselves can represent significant value. By contrast, in early-adoption states, the value proposition may be weaker due to market oversaturation and lower barriers to entry.

Understanding the local environment, cost of entry, and regulatory approval process is essential for both valuation and operational turnaround strategies

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Key Considerations for Practitioners

When approaching a cannabis receivership, professionals must answer critical questions:

  • What options are available under a proposed order?

  • How will regulators respond?

  • Who actually owns the company, and what related entities must be addressed?

  • What approvals are required to preserve or transfer value?

    Cannabis panel 2025

These considerations form the “methods to the madness” of cannabis receiverships—an environment where legal, financial, and regulatory risks intersect at every turn.

Conclusion

The cannabis industry’s rapid growth has been matched by equally rapid challenges. The CRA panel on “Anticipating a Cannabis Receivership” underscored the importance of specialized legal expertise, rigorous compliance oversight, and a deep understanding of state-specific landscapes.

As more cannabis businesses face financial distress, receivers, attorneys, and advisors will need to adapt strategies that not only stabilize operations but also safeguard long-term value in a uniquely complex sector.