John Schroyer
As several cannabis companies struggle under the weight of their debts, at least two publicly traded entities have managed to extend payment terms for tens of millions of dollars in debt they’re carrying.
Statehouse Holdings
California-based Statehouse Holdings Inc. had two separate announcements in the past month regarding slight delays for debt maturities. The initial one, announced June 6, pushed back a debt payment deadline to June 19, and then a subsequent announcement on June 21 delayed the repayment again until July 3.
Statehouse “continues to engage in discussions related to potential future financing options,” is the most color the company provided.
It’s the latest in a string of delays on its debt payments, going back to December last year when the company had a $5.4 million loan repayment due along with a $2.4 million fee, it noted in its annual financial statements released in May. The company stated in its annual report that it intended to refinance its senior debt, to the tune of $7.4 million, with Pelorus.
But the company’s fortunes so far this year have not improved much. At the end of the first quarter, Statehouse reported a $10 million net loss and an operating deficit of $369 million, despite laying off 16% of staff and implementing other cost-cutting measures.
And the delayed payments only related to a fraction of Statehouse’s total debt load, which is $35.8 million as of Dec. 31, 2022, according to its annual financials.
Ayr Wellness
The other company obtaining a lifeline on its $69 million debt was Florida-based Ayr Wellness, which took out loans from various creditors to finance expansion plans and acquisition deals in Pennsylvania, New Jersey, and Illinois.
Ayr announced Monday that it reached a deal with creditors to defer principal or amortization payments for two years on its debts, which will give it breathing room for 24 months, a move the company desperately needs after dropping a $197 million loss in the first quarter this year.
Still, the refinancing and debt management moves are to be expected by companies that have been struggling with cash flow, said Matt Karnes, principal at GreenWave Advisors.
“Financial re-engineering is a common theme in canna land these days … some may be able to pull something off, others may be more challenged,” Karnes wrote in an email to Green Market Report.
Such debt management strategies may become even more common, as many public cannabis companies continue to struggle to either break into the black or maintain their profitability.
