“Extinction-level Event” Underway for Cannabis Companies Running out of Cash
Over the next few months, as capital markets dry up, a number of cannabis companies will run out of cash, triggering layoffs and other financial havoc. This, according to an article in The Washington Post, reporting that many companies were already low on cash, prior to the Covid-19 pandemic. The total raised by cannabis industry businesses fell by 69% in March, compared to the previous month.
A survey of over 300 CFOs within and outside the cannabis industry found that 26% expect layoffs because of the financial impact of Covid-19. But within the cannabis industry, which was largely struggling with cash and capital raises prior to the pandemic, the situation is especially perilous. Craig Behnke, MJBiz Daily analyst, is quoted in the article as saying, “It’s going to be an extinction-level event for some companies.”