Cannabis – Blunt BusinessApril 10, 2023 – Media Mention
Cannabis Co-Chair, Michelle Mabugat, recently shared her insights with Los Angeles Business Journal regarding the current state of the cannabis industry.
“It’s not pretty out there in the cannabis economy,” said Michelle Mabugat, an attorney at Century City-based law firm Greenberg Glusker. “2022 was a real shakeout year with lots of closures and acquisitions. This year will be a reckoning for retailers.”
Mabugat has been advising companies in the cannabis and industrial hemp sector for more than a decade, covering branded consumer products, manufacturing and distribution. She forecasts that in the near future, during this year in fact, the industry will see more consolidation and an increase in the number of distressed businesses.
“There has been a 20-year medical market — a ‘gray’ market since 1996,” said Mabugat. “These legacy operators know their craft, but they aren’t used to paying the regulated market fees.”
Historically, the industry has been funded “mostly by private investors, a small pool of investors, but not banks,” Michelle Mabugat, an attorney at Century City-based Greenberg Glusker, said.
“There’s a huge debt bubble in the industry,” said Mabugat. “There’s a five-year-long trend of cannabis companies not paying the bills and there will be a year of reckoning.”
“There is a very large social-equity program granting licenses and ownership to communities impacted by the war on drugs,” Michelle Mabugat, an attorney at Century City-based Greenberg Glusker, said. “But there are delays getting lights on and doors open because of delays in the program.”