Jenel Stelton-HoltmeierCompany will slow its M&A strategy in effort to generate cash flow.
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A district judge is the New York has issued a preliminary injunction against the New York Office of Cannabis Management, preventing it from issuing licenses in several localities.
Variscite NY One, an LLC owned by Kenneth Gay, requested the injunction as it challenges the stateâs decision to award its first cannabis licenses to New Yorkers who have been incarcerated or arrested for the plant.
This injunction prevents the OCM from issuing licenses to applicants under the conditional adult-use retail dispensary (CAURD) program for the following geographic areas in the state:
- Finger Lakes
- Central New York
- Western New York
- Mid-Hudson
- Brooklyn
According to the court filing (attached below), Variscite NY One requested the injunction in order to âpreserve the status quo,â as the program had yet to issue any of the CAURD licenses. The company argued that New Yorkâs social equity program runs afoul of the dormant commerce clause, in part because it is not narrowly tailored enough to serve a âlegitimate local purpose.â
In issuing his decision, U.S. District Judge Gary Sharpe wrote that the OCM âdid not even attemptâ to show that its restrictions advanced such a local purpose.
In addition, the court agreed with Variscite that its exclusion from the initial process could cause âirreparable harmâ by granting an early advantage to other applicants.
The New York adult-use cannabis program specifically wanted to address the social equity aspect of licensing and chose to award the first licenses to what it calls âjustice applicants.â These applicants can be individuals who were convicted of or who had a parent, legal guardian, child, spouse, or dependent convicted of a âmarihuana-relatedâ offense in New York state prior to March 2021.
This is a developing story and will be updated as new information becomes available.
varscite-v-new-york-OCM-11102022
cannabis consumers embrace the spirit of Halloween.
Itâs been a rough news week for the cannabis industry. Two separate Canadian producers (The Flowr Corp. and Flower One) filed for creditor protection from the courts, and a cannabis information and education website cut more than one-fifth of its staff.
On top of that, long-beleaguered company CannTrust said it was making a proposal to creditors that could result in the company fully dissolving by the end of November.
But itâs also a cautionary tale for other companies who have been chasing growth at all costs, expecting the revenue to eventually cover all the costs. You have a business to run, so make sure youâre running it like a business.
Here are some expert tips on things you can do today to improve the health of your company tomorrow:
- Make sure youâre keeping accurate and complete records of all aspects of your business operations. âIf you canât prove something in writing, it might as well not exist,â cannabis accountant Zach Gordon recently told KayaPush. It might sound tedious, but itâs up to you to keep track of where all the dollars and cents are going in your company to make sure you can continue to meet your obligations. This is particularly important for publicly traded companies.
- Donât overextend your business too much. Raising capital via debt transactions has become more popular as more institutions have become more willing to provide loans to cannabis companies. According to Viridian Capital Advisors, debt accounted for 93% of all capital raised in cannabis through Oct. 14. But that money has risks that equity raises donât â in particular, a repayment schedule. If you’re not careful, that monthly obligation can be steep. For example, High Times found itself owing $100,000 every month; this week, the cannabis brand this week announced it had entered into a settlement agreement with the lender after it defaulted on the obligation.
- Donât wait until itâs too late to change. Itâs tempting to try and hold out for the better days you âknowâ are coming, but if you wait until the tough times to adjust your operations, you might find yourself in a position where you have to cut so deep it can be near impossible to recover. Flowr cut roughly 40% of its staff earlier this year (alongside divesting noncore operations), but the savings didn’t amount to enough to help it avoid bankruptcy. You can be hopeful, but always look at the finances with a cautious lens and position your company so that it can be nimble when things arenât rosy.
These tips aren’t magic bullets; they won’t solve all the challenges of operating a cannabis company. But they offer a great place to start to make sure your financial house is in order.
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