The Financial Post reports in its Thursday edition that the cannabis industry is expecting a slew of bankruptcies in the coming year as small and medium-sized companies low on cash struggle to raise funds.
The Post's Vanmala Subramaniam quotes Ranjeev Dhillon, a partner at McCarthy Tetrault LLP, saying: "We expect a few million dollars in legal fees from insolvencies and consolidation. Companies that cannot distinguish their brands and do no have the money to keep up operations on existing facilities will not be able to carry forward. The only kind of money you can raise right now, if at all, is debt."
There are currently more than 200 cannabis companies either in the cultivation, processing or extraction businesses, primarily supplying a domestic market that has yet to cross the $1-billion mark in annual sales. For Narbe Alexandrian, chief executive officer of Canopy Rivers, the venture capital arm of Canopy Growth, the lack of institutional investor interest is the sector's biggest red flag going into 2020.
"There's just no money coming in, so if you have a low cash balance, you might be in trouble," Mr. Alexandrian said. "We haven't seen the blood on the streets yet."
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