Most cannabis companies are not wound up properly, some cannabis companies (and their owners) suffer repercussions for this, and all cannabis companies (and their owners, and investors!) are well served by an orderly wind-up. This blog post will cover some basics on the cannabis business wind-up process.
First, though, I want to address a point of frequent confusion– “dissolving” and “winding up” a company are two different things. Dissolution occurs when a company representative files Articles of Dissolution, or similarly named paperwork, with the relevant Secretary of State. Dissolution may also ensue “administratively” by the State if a Company fails to pay taxes or fees. Dissolution is just one step in the wind-up process, and it often occurs early in that process. “Winding up”, conversely, is putting the whole thing to bed.
Step 1: Face the facts and get your affairs in order
There comes a point in the lifecycle of most cannabis businesses when it no longer makes sense to proceed. Most businesses eventually fail. According to BLS statistics aggregators, 20.8% of private sector U.S. businesses fail within a year, 48.8% fail within 5 years and 65.1% fail within 10 years. In the cannabis industry, I guarantee you those
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