Assessing the Value of Distressed Assets

by Dotan Y. Melech

New investment in the cannabis industry has slowed due to a combination of stifling regulations, economic uncertainty, lack of access to capital, and restrictive banking options. Nevertheless, skilled investors still can capitalize on opportunities arising from this uncommon convergence of market conditions.

While eager players who entered the space early struggle to save their distressed businesses, investors in the rapidly maturing sector want to focus on business fundamentals and financial performance. By taking a “back to basics” approach that puts a company’s day-to-day operations, management, and profitability under heavy scrutiny, savvy investors will keep their distance from companies that don’t have the revenue and structure in place to support operations, scaling, and growth.