Gold Flora, a Southern California-based cannabis company that operates 16 dispensaries statewide, is seeking to sell its assets through a receivership, the latest sign of distress in the weed industry.
Founded in 2017, the company is now facing mounting operating costs and legal fees stemming from a merger, Gold Flora’s announcement said.
The Costa Mesa-based company, which generates more than $100 million a year in revenue, said it expects to be placed into receivership in Los Angeles Superior Court and will sell all its dispensaries as well as its 10,000-square-foot cultivation campus.
“This was a difficult but correct decision to make for all stakeholders,” said chief executive and founder Laurie Holcomb in a statement last week. “We believe Gold Flora’s business remains valuable and sound, but receivership is our only option to sell the business as a going concern.”
Because cannabis is not federally legal, cannabis companies can’t file for bankruptcy like other struggling businesses might. Instead, a court-monitored receivership allows an attorney to auction off the company’s assets to repay investors and creditors.
Gold Flora owns popular dispensaries in the state including Airfield Supply Co. in San Jose and Calma in West Hollywood. The company distributes prominent brands of cannabis including Monogram, which was developed by rapper Jay-Z.
In its most recent quarterly filing, the company listed total assets of $209.7 million and total liabilities of $273.1 million as of Sept. 30.
It posted a net loss of $18.8 million on revenues of nearly $32.6 million in the third quarter of 2024.
Gold Flora is not the only cannabis company to face hurdles recently.
Once flush with cash from investors, the boutique dispensary company MedMen has closed several locations in California and has faced a flurry of lawsuits over alleged mismanagement and failure to pay its bills.
California cannabis companies have faced heavy competition from those looking to capitalize on the state’s green rush, and cannabis’ classification as a Schedule I drug presents unique obstacles.
As long as the drug remains illegal under federal law, many big financial institutions will avoid working with cannabis companies, limiting their ability to get business loans, open bank accounts and accept credit cards.
Cannabis businesses also pay far higher tax bills than most other companies because of a section of the federal tax code that prevents companies from taking typical business deductions from gross income associated with selling Schedule I or II substances.
Gold Flora merged in 2023 with TPCO, another California cannabis company that burned through $575 million before shutting down.
The cannabis company Gold Flora is seeking court protection in the face of mounting operations costs and obligations from lawsuits. Read More
