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Smoke, Fire, and Opportunity

Leader Board: Jeffrey C. Hampton

With this JCR issue focused on cannabis, we delve into the Wild West-like intersection of social politics, local government budgets, criminal law, NIMBYism, banking systems, receiverships, bankruptcies, and federal vs. state law. It almost makes one’s head spin thinking about it (pun intended).

But beneath the surface, the business issues are really fascinating for us in the turnaround, restructuring, and bankruptcy industry. Amid changing laws and public perceptions, the cannabis industry is set up for successes and failures—and opportunities for TMA members.

Whether urban myth, truth, or just a great story of how cannabis businesses are different, you may have heard of the cannabis company that was told by its bank to “please, please launder your cash before you bring it to us.” With understandable shock, the cannabis company asked for clarification.

The bank replied that it stored the cannabis company’s large cash deposits in its vault for safekeeping overnight. The following morning, when the time-lock released and bank employees opened the vault, the odor of cannabis was overwhelming, making the entire bank smell like a cannabis dispensary and smoking lounge. Clarifying its earlier communication, the bank explained: “Please wash the cash before you give it to us. Take it to a laundromat. Just do something to clean the weed smell from the $20 and $100 bills—or else you may need to find a new bank!”

In another example, when wildfires tore through parts of California and Oregon in recent years, the concern was not just the lucrative cannabis crops going up in smoke, but that the intense heat would burn up large sums of cash held in supposedly fireproof safes of cannabis companies. At the time, most banks wouldn’t yet accept deposits from cannabis companies for fear of sanctions by regulators since marijuana remains illegal on the federal level despite its legalization for recreational use by 18 states and its decriminalization by another 13 states and U.S. territories.

With many serial entrepreneurs—looking to make green in cannabis—now partnered with long-time cannabis “business people” who are coming out of the shadows, it sets up potentials for fraud and mismanagement of cash. Concepts of accounting controls, cash management, and inventory control take on new meanings and challenges. Cannabis creates issues and requires innovative solutions in banking, UCC/security interests, state receiverships, accounting controls, physical security, crop insurance, counterfeit products, testing, marketing, and permitting/zoning, to name a few.

So, with this issue of the JCR, I hope you learn about this evolving industry and its many challenges. We’ve assembled some experts in the field who will provide you with additional insights and knowledge that may be useful to you in your work.

Thanks, stay safe, and be #TMAProud.

Best Regards,

Matthew English

Matthew English, CTP
TMA Global President

Matthew English

Matthew English, CTP

Matthew English, CTP, is a senior managing director with Arch + Beam. An experienced strategy, operations, and turnaround consultant, he works with a wide variety of top corporate clients across many industries, often in the roles of CRO, financial advisor, or turnaround consultant, helping clients improve performance and restructure operations. His areas of expertise include restructuring, bankruptcy, receiverships, assignments for the benefit of creditors, organizational redesign, cost optimization, operations, mergers and acquisitions, financial analysis, and cash flow management.

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