Herbl Closing Down-They’re Not The First… Or The Last

There had been talk recently in the industry about Herbl having problems. Some of us have seen this type of thing coming for quite some time now. The inevitable consolidation of the cannabis industry. Although the speed at which it’s happening has been somewhat surprising.

The cold, harsh reality is that the people giving out the licenses are our own government. They are only concerned about tax dollars. Not the well-being of their citizens, either from a medical or an entrepreneurial vantage point, just from tax dollars and greed.

There are no “big” cannabis companies yet. Over-regulation and over-taxation have stifled the legal cannabis industry from the very beginning. There’s no ability to effectively lobby for favorable legislation. So we’re stuck with what greedy and corrupted politicians are submitting for legislation. Even the top five largest cannabis companies combined pale in comparison to the power and influence that big alcohol, big pharma, and big tobacco wield.

Make no mistake. The government doesn’t care about any companies currently in cannabis. They are infinitesimal to them. Completely replaceable, from the smallest to the largest.

So it’s come to this, allow the pioneers and the early adopters to stick their heads up for a game of legislative whack-a-mole. Overregulate and overtax until they have no choice but to go out of business or sell to the real big businesses in the long run. Then the alcohol, pharma, and tobacco industries lobby to reduce cannabis regulation and taxation. Making it an industry that can actually sustain and regulate itself.

And that, ladies and gentlemen, is how you take the people’s herb and turn it into a profitable industry for all of your political cronies on the state and capitol hills.

Herbl… Not the first… And not the last.

Herbl, a well-known cannabis company based in California, is no more. After months of financial troubles and unpaid invoices to its investors and brands, the company officially closed its doors this week. The closure has left many people wondering what effect it will have on the industry as a whole. For starters, Herbl’s sudden disappearance means that revenue from products already sold is lost forever – something that could spell trouble for large and small businesses that depend on regular income streams. Additionally, tax money owed to the state might be gone too – an issue that could leave California millions out of pocket if not addressed quickly.

With so much at stake, it’s clear that Herbl’s closure presents many challenges for the cannabis industry. It’s now up to policymakers and industry leaders to come together and take action to mitigate the negative effects of Herbl’s closure and ensure that similar situations do not occur in the future. The repercussions of Herbl’s collapse remain to be seen, but it is clear that it will have a lasting impact on the cannabis industry as a whole.

Problems Faced by Licensed Retailers, Cultivators, and Brands Due To Herbl’s Downfall

Herbl’s downfall into receivership has created major issues for licensed retailers, cultivators, and brands. Under California’s mandatory distributor model, all cannabis products must be sold through licensed distributors like Herbl. As a result of this system, these businesses face the pressure to collect payment from retailers before they can remit taxes due to the state as well as payment for the original product delivery to the brand.

The closure of Herbl has made it impossible for many brands to get paid on time – or even at all. On top of that, with no money coming in from Herbl anymore, retailers have very little incentive to pay up what they owe. This has created a domino effect where everyone along the value chain struggles to get paid, making it difficult for businesses, both large and small, to survive. Clearly, this is an unsustainable situation that needs to be addressed quickly if the industry is to thrive in the long term.

Industry Insiders React to Herbl’s Demise

The closure of Herbl has had a major impact on the cannabis industry, and it’s one that many people are still coming to terms with. Former employees of the company are now seeking new work as they try to pick up the pieces after Herbl’s sudden disappearance.

Meanwhile, Wesley Hein, Head of Corporate Development and Government Affairs at Mammoth Distribution and president of the Cannabis Distribution Association, a trade group representing distributors, has spoken out about the structural issues within the industry that have contributed to Herbl’s downfall.

According to him, “The recent receivership of Herbl, one of California’s largest cannabis distributors, should be a wake-up call to policymakers that all is not well, and immediate action is called for to avert a crisis that has already started. Brands and operators are leaving the state while others are simply closing their doors. Herbl was well-run, well-financed, and stocked with well-known brands. However, even with these advantages, it was unable to overcome the structural challenges of operating in California and now finds itself in receivership.”

He further states, “In 2018, at the start of legalization, with the best cannabis growers, brands, and operators in the world, California was the odds-on favorite to be the center of the coming massive global legal cannabis industry, with the same upside as this state’s other iconic industries: Napa, Hollywood, and Silicon Valley. But those industries don’t face burdensome regulations, exorbitant taxes.”

“Just one example of the taxes we face, in the City of Los Angeles, it takes 79 liquor stores to generate the same local tax liability as a single similarly sized dispensary. Cannabis distributors, cultivators, and manufacturers all face similarly exorbitant tax rates. It’s no wonder that approximately 14% of licensed retailers could not remit their excise taxes due last month or that the state has seen seven straight quarters of excise tax declines.” Says Hein.

“Herbl’s downfall is a stark reminder that if state and local policymakers don’t immediately address regulations, taxes, and the illicit market governing, we are going to see the continued erosion of a vibrant industry. We need decisive and immediate action.”

He is not wrong in his conclusion of needing immediate and decisive action in CA and nationwide.

Herbl’s closure has drastically impacted the cannabis industry, leaving many people wondering what effect it will have on businesses, both large and small. The repercussions of Herbl’s collapse remain to be seen, but it is clear that it will have a lasting effect on the entire industry.

Licensed retailers, cultivators, and brands are now facing issues such as payment delays due to the mandatory distributor model, while industry insiders are speaking out about the structural challenges that have contributed to Herbl’s downfall.

It is now up to policymakers and industry leaders to come together and create a solution that works for everyone to keep the cannabis industry flourishing.

Not the first… And not the last.

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