To get the best outcome in a cannabis receivership, here’s how to structure the process and plan for worst-case scenarios.

The cannabis industry is booming. But with every boom comes an inevitable bust.

There are thousands of dispensaries across the country in legal medical and adult-use markets, and they’re supported by myriad businesses in the supply chain and ancillary service providers—cultivation facilities, processors, manufacturers, distributors, security entities, point-of-sale software tech, real estate, accounting … the list goes on. And not all businesses survive in this crowded, ever-changing space.

In a cash-driven industry dictated by the continued illegality of cannabis under federal law and restrictive, confusing and often-debilitating state regulations, there are a number of distressed businesses with cannabis creditors turning to receivership as a means to recoup whatever is possible after loan payments have stopped and owners aren’t returning calls.

Here’s a closer look at what receivership means for cannabis creditors.