California Cannabis Distributor Herbl Collapses, Raising Concerns in the Industry

California Cannabis Distributor Herbl Collapses, Raising Concerns in the Industry

California cannabis distributor Herbl has announced the closure of its operations and entry into receivership, dealing a significant blow to the state’s cannabis industry. As one of the largest licensed distributors in California, Herbl played a crucial role in the mandatory distributor model, through which all cannabis brands were required to sell their products.

Herbl’s collapse raises concerns over potential financial repercussions for other brands in the industry. With an estimated $700 million in product sales in 2022, the distributor’s closure could leave numerous brands facing unpaid invoices, potentially totaling tens of millions of dollars. Additionally, the state of California may be owed millions of dollars in unpaid taxes.

The collapse of Herbl serves as a wake-up call to policymakers, highlighting the structural challenges faced by operators in California’s cannabis market. Despite being well-run, well-financed, and associated with renowned brands, Herbl was unable to overcome these challenges, leading to its current receivership status.

Former employees of Herbl have taken to LinkedIn to announce their search for new job opportunities, indicating the significant impact of the company’s closure on its workforce. Most employees have been laid off, leaving only a skeleton crew dedicated to pursuing payments from retailers and managing inquiries from other operators who are themselves seeking overdue payments from Herbl.

According to the report, Herbl began missing payments to other brands approximately six weeks ago, indicating a deteriorating financial situation that ultimately led to the company’s collapse.

The news of Herbl’s closure underscores the need for immediate action by policymakers to address the challenges facing the California cannabis industry. Without intervention, further crises could arise, impacting not only businesses but also the state’s overall cannabis ecosystem.

Stay informed about the evolving world of cannabis. Subscribe to NECANN now.