The other big Illinois news of the day was the busted $850 million acquisition of Verano Holdings by Harvest Health & Recreation, the second big acquisition deal to fail, after PharmaCann’s planned $682 million purchase of MedMen collapsed last October. Still on the bubble: Curaleaf’s acquisition of Grassroots Cannabis for $875 million in stock and cash, announced last July but still not closed.

What’s going on? Well, as you can see above, many U.S.-based public cannabis companies are burning through their cash piles pretty quick. It’s annual financials season right now, so not everyone has reported yet, but Curaleaf just reported that its current assets more than halved since last year, from $313 million to $149 million. Harvest Health & Recreation reported $248 million in current assets last year, but through September 2019 it burned over $67 million from high operations costs, while December is most likely to be another big money loser.

Making things harder for U.S.-based cannabis companies is lack of access to debt capital. While regular American companies have been frantically drawing down on their credit lines, cannabis companies, hobbled by their semi-legal status, are forced to bank with state chartered banks, which tend to have less ability to lend than say Citibank, and often charge high interest rates for the legal risk of working with cannabis companies.

Since equity markets are not a good place to get more money these days, public cannabis companies have had to get creative, through private debt offerings, or real estate leaseback programs with REITs specifically created for the purpose. But those projects take time to close, unlike credit lines which are instantly accessible, or bank debt, which can take a week or two, if that, to close.

In short, every cannabis company is experiencing an extra intense pandemic cash crunch right now. No amount of Federal Reserve liquidity actions will likely impact cannabis, as CFOs clamp down on every out-going cash flow item they can find. 

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Editor Mike is an itinerate reporter, recovering political consultant, and strategy game devotee.