Cannabis Industry In The Red? 'Mountains Of Debt' Are Coming Due, Green Market Report Co-Founder Says

Debra Borchardt, the executive editor and co-founder of Green Market Report, offered a frank assessment of the cannabis industry's debt burden at the Benzinga Cannabis Capital Conference.

As economic challenges continue to mount for cannabis businesses, Borchardt emphasized the importance of managing debt proactively, especially as the legislative landscape evolves.

In her discussion, Borchardt noted that while debt has been relatively easy for cannabis companies to acquire, managing that debt has become a critical issue. "What we’ve seen within the cannabis industry is a lot of companies building up these huge mountains of debt… It’s a little concerning because a lot of that debt they agreed to a couple of years ago is all starting to come due," she said.

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Industry Shifts

Borchardt highlighted that some cannabis companies are starting to address these challenges. Green Thumb Industries, for example, recently eliminated a portion of its looming debt in an innovative deal, which Borchardt described as a positive move. "I think we’re going to see more companies address it," she said. While conditions may be more favorable, taking action now was a theme throughout the discussion.

Borchardt advised that cannabis companies must be cautious about overextending themselves and carefully assess their debt obligations before agreeing to new financing arrangements. “It is still a challenging business, but if we get some of this legislation… it’s going to be a different marketplace,” she noted, urging businesses to plan for future regulatory changes that could improve the operating environment.

Looking Ahead to Legislative Changes

Although Borchardt expressed caution about expecting any immediate legislative breakthroughs, she acknowledged that the upcoming months could bring more clarity. With earning season just around the corner, many companies are preparing to report their third-quarter numbers in November, providing a clearer picture of the industry’s financial health.

"We will have that [legislative] hearing, but nothing will come from that hearing," Borchardt predicted. While the cannabis industry awaits more concrete regulatory changes, she encouraged companies to use this time for strategic planning and exploring ways to reduce their debt burdens.

As 2024 approaches, Borchardt’s message is clear: cannabis companies must address their debt problems now or risk being overwhelmed in the future. By taking proactive steps and preparing for potential changes in the regulatory environment, companies can position themselves for long-term success in a competitive and changing industry.

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