cannabis industry distressed assets, cannabis bankruptcy

Cannabis Industry Distressed Assets: Strategies for Thriving in Turbulent Times

by | Feb 21, 2024

cannabis industry distressed assets, cannabis bankruptcy

Written by Kristina Etter

Kristina is a digital content creator and designer. She has a talent for creating engaging and informative content that resonates with our professional audience. Kristina’s passion for the cannabis industry stems from her belief that it has the potential to revolutionize the world in many ways, and has a personal testimony of cannabis success.

Cannabis industry businesses are facing a multitude of challenges, including financial distress and asset instability. From regulatory hurdles to market saturation and fluctuating consumer demands, navigating the turbulent waters of the cannabis market requires resilience and strategic foresight.

Amidst regulatory uncertainties, fierce competition, and shifting consumer preferences, cannabis businesses must grapple with the reality of distressed assets. Whether it’s a struggling dispensary in Boulder County or a cultivation facility facing mounting financial pressures, the need to effectively manage distressed assets has never been more crucial.

We had the privilege of speaking with two industry veterans who bring a wealth of experience and expertise to the table. Jordan Tritt, CEO and Co-Founder, and Michael Teller, Chief Operating Officer of The Panther Group, graciously shared their insights on buying and repurposing cannabis industry distressed assets.

The Panther Group, cannabis industry distressed assets

Years of Financial Expertise

With an impressive finance and venture capital background, Jordan Tritt has been a pivotal figure in the cannabis space since 2014. As the principal and day-to-day manager of two cannabis venture funds, Jordan has deployed over $40 million across 50 companies, demonstrating his deep understanding of investment strategies and market dynamics.

Before his foray into cannabis, Jordan held key financial roles in high-growth private companies and venture funds, raising over $30 million and honing his expertise in finance and operations.

“We made these investments very early on, in retrospect, and it has allowed us to have a good vantage point on what’s happening in this space in many different areas,” Jordan proclaimed.

Michael Teller also brings a rich entrepreneurial background to the table, with a focus on propelling startups to unprecedented success. With over 15 years in technology and operational leadership, Michael has a proven track record of transforming struggling businesses into thriving enterprises. Since joining The Panther Group in 2021, Michael has extended his expertise into the cannabis sector, contributing significantly to the organization’s strategic and operational initiatives.

During our conversation, Michael said, “It’s really exciting to take an industry so new and starving for people to help it grow and build it up. Every day is like a rollercoaster, and I wouldn’t trade it for the world.”

Together, these men offer a unique blend of financial acumen, operational excellence, and entrepreneurial insight, making them invaluable sources of wisdom as the cannabis industry faces its biggest hurdles.

Up in Smoke

cannabis industry distressed assets, the panther group, mergers and acquisitions

The cannabis industry has always presented numerous challenges for businesses, including heavy taxation, competition from the unregulated hemp sector, and the looming threat of federal illegality. Many cannabis enterprises find themselves burdened by debt and facing the possibility of collapse.

In a recent guide published by The Panther Group called “Up in Smoke,” they made a point of permitting struggling entrepreneurs to surrender.

The guide acknowledges, “There’s no shame in admitting when it’s time to move on. You’ve undertaken the Herculean task of building a business, employing countless individuals, and contributing to a transformative industry still grappling with federal illegality. The odds were stacked against you, yet you gave it your all. Rest assured, countless entrepreneurs across the nation are currently sharing your plight.”

In the face of such adversity, traditional options like securing bank loans or seeking cannabis bankruptcies are limited. Instead, they must consider selling off assets or navigating the complex receivership process.

That’s where the Panther Group shines.

Tritt stated, “We recognize that a lot of times companies aren’t ready for our services, so we started an effort to put out these educational pieces to be a part of the conversation and help them.”

“We are extremely mindful and caring of developing an industry that we’re proud of,” he added. “Opening the conversation with us, they can start thinking holistically about the next phase, what they can do, and their options. They’re not alone.”

Cannabis Industry Distressed Assets

Jordan provided insights into the evolving landscape of the cannabis industry, emphasizing the need for consolidation and strategic M&A transactions. Having invested in the space since 2017 and observing the challenges and trends firsthand, Tritt underscores the importance of adapting to the changing dynamics of the industry.

He stated, “We’re in a unique spot. On one hand, we have all this history and involvement in companies that we work with; on the other, we’re focused on where the industry will be in 10 years.”

He also made a point of highlighting the competitive nature of specific segments, such as point-of-sale (POS) systems, and foresees a future of consolidation driven by the difficulty of sustaining numerous software companies and ancillary businesses.

“There’s going to be consolidation, but we feel like we have a good vantage point to start evolving into that,” he said optimistically.

Teller echoed Tritt’s sentiments, emphasizing the importance of operational excellence and strong leadership in navigating the complexities of the cannabis market. He sees the parallels to other industries’ early stages of development, noting that successful companies will emerge once regulatory hurdles are overcome and operational efficiencies are optimized.

cannabis industry distressed assets

Repurpose & Reoptimize Distressed Assets

Despite the challenges faced by these cannabis industry distressed assets, both Tritt and Teller see value in repurposing and optimizing these assets through strategic mergers and acquisitions. Tritt discussed the potential for brands to transition to asset-lite models, focusing on their core competencies while leveraging existing infrastructure for manufacturing and distribution. By repurposing cannabis industry distressed assets in this manner, companies can unlock significant value and drive industry consolidation.

Teller also emphasized the benefits of collaboration and specialization within the industry, noting that bringing together companies with complementary strengths can lead to a stronger, more resilient cannabis sector. He believes in the potential for M&A transactions to streamline operations, reduce costs, and create opportunities for expansion into new markets.

Michael concluded our interview by saying, “We want to be the good people in cannabis. There are two types of people in the industry: good people and people looking for an opportunity who don’t care about the industry. It’s our duty to protect the industry from opportunists.”

Both Tritt and Teller believe that consolidation and strategic M&A transactions will play a pivotal role in shaping the future of the cannabis industry. By repurposing cannabis industry distressed assets and fostering collaboration among industry players, companies can navigate the challenges of the market and position themselves for long-term success.