With at least one of the state’s four existing cannabis cultivators in financial trouble, the state said the recreational adult-use market won’t shut down even if it loses a grower.
The Department of Consumer Protection (DCP) said this week that even if an existing cultivator were to potentially cease operations, thereby dropping the state’s total growing and manufacturing capacity to below the 250,000-square-foot requirement, the adult-use market will remain open.
“Once sales begin they will not close,” the DCP told the Hartford Business Journal.
As stipulated in last year’s legalization law, adult-use marijuana sales can’t begin until there is at least 250,000 square feet of growing and manufacturing space in the state. The state’s four existing medical marijuana cultivators have all converted to a hybrid license, which allows them to serve both markets, and that gave the state the capacity needed to begin adult-use sales Jan. 10.
But one of the state’s four growers, Theraplant, owned by New York-based multistate operator Greenrose Holding Co., is facing financial headwinds. The company said in its third-quarter filing with the U.S. Securities and Exchange Commission that, as of Sept. 30, it didn’t have enough working capital resources to satisfy its liabilities.
“As a result, after taking into account the company’s cash flow projections, we do not believe the Company will have sufficient cash on hand or available liquidity to meet its obligations in the upcoming reporting periods, and we have substantial doubt regarding our ability to continue as a going concern,” the company wrote in its earnings report.
Those concerns include potentially shutting the business down, Greenrose went on to say.
“We will need substantial additional capital to fund our operations in future reporting periods. The Company expects cash flows to increase over time, but not sufficiently in the short term to be able to pay for expenses, without raising additional capital. If we are unable to generate additional revenue and obtain financing on acceptable terms, or at all, we will likely be required to cease our operations, pursue a plan to sell our operating assets, or otherwise modify our business strategy, which could materially harm our future business prospects,” the company said in the earnings statement.
Greenrose said that Theraplant itself is generating cash from sales and “deploying its capital reserves to acquire and develop assets capable of producing additional revenues and earnings over both the immediate and near term to support its business growth and expansion.”
The DCP said that last year’s cannabis law gives the commissioner the ability to limit cannabis transactions if necessary, so that could be used to address supply concerns.
“Currently, transactions will be limited to ¼ ounce of raw flower or its equivalent, and we do not anticipate any supply issues at this time,” the DCP said.
The DCP said it doesn’t have a timeframe as to when the first newly licensed growers could begin having products on store shelves, but said several have already received their provisional licenses and are “actively working toward opening.”
