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Why struggling cannabis companies may want to turn to a receivership

The cannabis industry in Oregon has been struggling in recent years. In addition to being impacted by inflation and an ailing economy, the vast overproduction of cannabis in the state has caused prices to fall. As the Portland Business Journal previously reported, the median price for usable cannabis has been down considerably since 2021 and reported sales from dispensaries have dropped over the past year as consumers are spending more money on gas and groceries.

These factors have left many cannabis companies unable to meet their debt obligations and struggling to survive. Because cannabis is still illegal at the federal level, failing cannabis companies have limited options as federal bankruptcy mechanisms are generally unavailable.

Despite the grim circumstances, there are still avenues that can assist cannabis companies that have multiple creditors with restructuring their business and effectively disposing of assets. One option available is a state-level receivership. In a receivership, a trustee or receiver is appointed by a court to preserve or manage the disposition of a company’s assets for the benefit of the stakeholders involved.

A receiver may apply for and obtain temporary authority from the Oregon Liquor and Cannabis Commission (OLCC) to operate a licensed cannabis business. Upon the OLCC granting the temporary authority, the receiver must immediately begin operating the business, effectively taking over the rights and responsibilities previously conferred upon the business owner. The temporary authority is initially valid for 60 days but may be revoked sooner or extended as reasonably necessary to allow for the disposition of the business.


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