Theraplant is in big financial trouble, and the fate of adult-use cannabis in Connecticut could hang in the balance

Submitted by gyokuro t3_zmqxyn in Connecticut

Connecticut law requires at least 250,000 square feet of cannabis growing & manufacturing space in the aggregate be approved for adult-use production before retail sales can begin. Theraplant LLC was last to convert and thus the linchpin. Now look at their parent company The Greenrose Holding Company's recent 10Q:

"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."

Net loss of just under $61mil in the first 9 months of 2022 alone. $962K cash and cash equivalents balance. This company has one foot in the grave already. What happens to adult use in Connecticut once they go belly up, and the 250K sqft. requirement is no longer met? The market is supposed to open on January 10, 2023. Will Greenrose even last that long?

Look in the Edgar files under $GNRS, there a lot of filings and forbearance agreements along with new self appointed board members and the removal of the original CEO with a emergency special board meeting. It looks like the funders want to steal the company.

2

Comments

You must log in or register to comment.

IndicationOver t1_j0cklco wrote

Wow you are obsessed with CT Cannabis news

Yea, I don't know what else to add to this lol, NBC30 investigates

11

Last-Instruction739 t1_j0dxoup wrote

Yeah man you ever check out cannabis related news….on weed?

What’s this company doing? There’s some crazy shit man.

There's a dude in the bushes. Has he got a gun? I dunno! RED TEAM GO, RED TEAM GO.

5

_cheeez_ t1_j0d78fd wrote

Hopefully theraplant goes out of business . Absolute garbage of a company and an insult to actual cannabis

8

usernamedunbeentaken t1_j0ckdvs wrote

If you don't pay your debt the lenders (or funders in your parlance) seize the company. They are given that right in the original loan agreement, and without that protection they wouldn't have lent the money in the first place. They aren't "stealing" anything.

But as to your original point I don't know what this means, other than proving once again that the more convoluted you make a law and the more regulation you try to introduce, the more unintended consequences can result.

3

gyokuro OP t1_j0cr0w8 wrote

I still think they’ll likely come up with a legalese answer for why they won’t have to shutdown the market if canopy space dips below 250k. “Projected future canopy footprint will sufficiently replace the outgoing”

0

AhbabaOooMaoMao t1_j0cltyd wrote

>If you don't pay your debt the lenders (or funders in your parlance) seize the company. They are given that right in the original loan agreement, and without that protection they wouldn't have lent the money in the first place. They aren't "stealing" anything.

Very astute observation.

>But as to your original point I don't know what this means, other than proving once again that the more convoluted you make a law and the more regulation you try to introduce, the more unintended consequences can result.

But then off the deep end.

−2

gyokuro OP t1_j0cnquv wrote

Serious question: does the SPAC factor come into play here in terms of how the debt can be restructured? I am not a lawyer.

0

AhbabaOooMaoMao t1_j0cvdpv wrote

In general, when a SPAC can't meet its financing obligations, it will dissolve automatically, and its assets get sold off and distributed to investors and creditors, in the usual course. The officers and directors of the SPAC then get sued by shareholders of the SPAC.

Creditors of a target company usually want a SPAC to go through, and this they have incentive to reach terms with the SPAC, that are contingent on the SPAC completing, at which time the SPAC closes it's deals with the target companies, and they are merged or acquired into the final, public or private corporation, or combination thereof.

If the SPAC fails, the deals don't close, and the target companies continue operating as they normally would.

Here, the SPAC is upside down. Federal law is pretty nuanced and I don't know hardly anything about these particular companies, so I can't say whether the SPAC will terminate now, or if it might be allowed to try and raise more money, or even restructure its own debts.

If it does fail, Theraplant will just continue running without merging. That could be a problem if its potential sale to the SPAC was the thing keeping it afloat. The SPAC could be lending money to distressed target companies to keep them operating before the SPAC closes.

In the case of a grow house here in CT that's ready to open, I can't imagine a scenario where it doesn't open due to a lack of money. If the SPAC fails, and if Theraplant was out of money, it would just find another buyer, instead of the SPAC.

0

gyokuro OP t1_j0cwyl7 wrote

So maybe Silver Point Capital just keeps infusing them with runway, plausibly? Similar to what happens in Canada.

1

1234nameuser t1_j0cthls wrote

Is the law written as a requirement ONLY for the start of retail sales?

If so, then it shouldn't be an issue other than creating bottlenecks once they shut it down that forces people back into the illegal / MA markets.

2

gyokuro OP t1_j0cu4wl wrote

Not sure about the letter, but the spirit of this part of the law is to ensure adequate capacity in the supply pipeline before opening up adult-use retailers. Without Theraplant, that pipeline is right back to where it was prior to November 10, 2022 when they converted.

1

ctusa73 t1_j0eigqn wrote

Lol , I enjoy a trip to Mass. Eat there, drink there, buy their marry wanna

1