In the rapidly evolving cannabis industry, operators often face unforeseen challenges that can threaten their business continuity. Chelsea Mulligan, known as the Dispensary Whisperer, sheds light on a critical yet often misunderstood process: receivership. With extensive experience managing over 120 licenses and working with more than 80 dispensaries nationwide, Mulligan emphasizes the importance of understanding how receivership can serve as a tool for stabilization and recovery.
What Is Receivership and How Does It Differ from Other Processes?
Ryan Baker, a seasoned fiduciary with over 200 cases across multiple industries—including cannabis—joins the discussion to demystify receivership. Baker explains that a receiver is a neutral court-appointed professional who steps in during times of chaos—whether due to fraud, loan default, or partnership disputes—to stabilize a business, preserve its value, and manage assets.
Unlike bankruptcy or restructuring, receivership is more flexible, especially in the cannabis industry where federal restrictions limit traditional options. Baker likens a receiver to a referee or paramedic, tasked with managing a troubled operation until a resolution is reached, whether that involves sale, refinance, or wind-down.
Common Triggers for Receivership in Cannabis Businesses
Baker outlines three primary reasons why cannabis businesses end up in receivership:
- Loan Defaults: Lenders prefer receivership over foreclosure to protect collateral, especially when borrowers fall behind on payments.
- Fraud or Misconduct: Allegations of illegal activity or misconduct can lead courts to appoint a receiver to investigate and mitigate damages.
- Partnership Disputes: Disagreements among partners, which are prevalent in the industry, can cripple operations, prompting court intervention.
He shares an example of a dispensary embroiled in a partner war, where a receiver was brought in to stabilize operations until disputes were resolved.
The First Steps in Crisis Management: Triage and Stabilization
Once appointed, Baker emphasizes a strategic approach—what he calls “triage”—focused on immediate priorities: securing cash, inventory, compliance, and maintaining operations. For instance, he recalls a high-end cultivation operation with only six weeks of cash remaining; by swiftly securing funds, managing inventory, and finding a buyer, they preserved jobs and recovered value.
Baker highlights that early intervention is crucial. The longer a troubled business remains unmanaged, the lower its chances of recovery. He notes that maintaining operations not only preserves value but also protects jobs, which he considers a humane and ethical priority.
Unique Challenges of Cannabis Receivership
Baker underscores that cannabis businesses face unique hurdles compared to other industries. The federal illegality creates obstacles for traditional financing, bankruptcy options, and restructuring processes. This environment demands creativity—such as using receivership to transfer licenses, cleanse assets, and facilitate mergers or sales—while maintaining compliance.
He points out that cannabis operators have often accumulated “battle scars,” yet those who survive the shakeout are becoming more professional, compliant, and resilient. Baker remains hopeful that, with continued industry maturation and eventual federal reform, these challenges will diminish.
Outcomes and Future Outlook
Baker states that receivership isn’t always a death sentence. It can lead to several outcomes:
- Refinance or Buyout: Existing owners can secure new capital and regain control.
- Sale as a Going Concern: Selling the business intact to a new operator can maximize value and preserve jobs.
- Liquidation: When no other options exist, business assets are sold off in an organized wind-down.
He emphasizes that timing is critical—early appointment offers the best chance for a successful turnaround.
Looking forward, Baker sees a more professional and compliant cannabis industry emerging, with stronger systems and greater institutional involvement. He advocates for federal recognition—such as safe banking and rescheduling—to unlock more tools like bankruptcy and to foster growth.
Connecting with Industry Leaders
Baker encourages industry stakeholders to reach out via LinkedIn or his company, Verax Business Group, to learn more about fiduciary services and receivership options. His mission aligns with Chelsea Mulligan’s vision: supporting cannabis businesses not just to survive but to thrive responsibly and ethically.
Though often perceived as a worst-case scenario, receivership in cannabis is increasingly viewed as a strategic tool for stabilization and recovery. With experienced professionals like Ryan Baker guiding the process, cannabis operators can navigate turbulent waters, protect their assets, and pave the way for a more resilient industry.
