Financially distressed cannabis companies continued to seek refuge in Canadian insolvency law in 2023, although such insolvency filings under one statute declined from 2022.
This year’s cannabis insolvencies included big names such as retailer Fire & Flower and producer Aleafia Health, highlighting the industrywide struggle to keep operating in the face of low marijuana prices, high taxes and trouble accessing new funding.
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Seven of the 57 filings under the Companies’ Creditors Arrangement Act (CCAA) through Dec. 15, 2023, or about 12%, involved marijuana companies or cannabis-related entities.
That represents a decline from 2022, when more than a third of all businesses filing for CCAA had some involvement in cannabis.
Other troubled cannabis companies used a different Canadian insolvency statute, the Bankruptcy and Insolvency Act.
Insolvent Canadian marijuana companies typically have in common “a legacy of huge capital expenditures to build a facility and get licensed,” said Trina
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