{"id":35462,"date":"2025-07-14T09:59:30","date_gmt":"2025-07-14T13:59:30","guid":{"rendered":"https:\/\/www.millerthomson.com\/?p=35462"},"modified":"2025-07-14T09:59:32","modified_gmt":"2025-07-14T13:59:32","slug":"restructure-recover-rebuild-a-guide-for-cannabis-operators-in-transition","status":"publish","type":"post","link":"https:\/\/www.millerthomson.com\/en\/insights\/restructuring-and-insolvency\/restructure-recover-rebuild-a-guide-for-cannabis-operators-in-transition\/","title":{"rendered":"Restructure, recover, rebuild: A guide for cannabis operators in transition"},"content":{"rendered":"\n

In Canada\u2019s evolving cannabis industry, entering a restructuring process such as under the Companies’ Creditors Arrangement Act (the \u201cCCAA<\/strong>\u201d) is no longer seen as a failure, but rather as a tool to preserve business continuity and long-term value. However, navigating the CCAA process is only one part of the journey. For licensed producers, maintaining credibility with regulators, distributors, and the marketplace is just as critical as managing legal proceedings.<\/p>\n\n\n\n

This article outlines key challenges and reputational strategies for cannabis companies undergoing restructuring.<\/p>\n\n\n\n

Excise compliance: Maintaining the license and the relationship<\/h2>\n\n\n\n

The Canada Revenue Agency (the \u201cCRA<\/strong>\u201d) continues to play a central role in overseeing the cannabis sector, particularly in relation to excise duty. Misconceptions persist about the CRA’s credit and collateral policies; however, the agency has clarified that its guidelines on credit terms and bond coverage are publicly accessible.<\/p>\n\n\n\n

Maintaining an excise license throughout the CCAA process is non-negotiable. The CRA expects companies to remain compliant and transparent and conducts thorough assessments to determine appropriate bond or collateral levels for companies emerging from restructuring. Open and frequent communication is essential to building trust with the CRA, especially when negotiating excise-related matters.<\/p>\n\n\n\n

Operational excellence in the eyes of the OCS<\/h2>\n\n\n\n

From the perspective of the Ontario Cannabis Store (the \u201cOCS<\/strong>\u201d), entering CCAA proceedings is not penalized. However, it can divert internal teams from day-to-day operations, which can result in reduced fill rates and lower sales performance. While the OCS maintains a business-as-usual approach during a company\u2019s CCAA filing, it continues to prioritize operational efficiency and market performance.<\/p>\n\n\n\n

Simply put, legal proceedings do not excuse poor marketplace execution. Companies must maintain high service levels and fulfillment standards if they wish to preserve shelf space and customer trust.<\/p>\n\n\n\n

Leadership accountability and early engagement<\/h2>\n\n\n\n

A recurring concern raised by industry advisors is the delay in seeking professional guidance. Many cannabis businesses wait too long to acknowledge their financial or operational challenges, often allowing issues to escalate unnecessarily. Setting aside ego, embracing a proactive approach, and engaging restructuring professionals early can mean the difference between stabilization and deeper operational risk.<\/p>\n\n\n\n

Effective leadership during a restructuring period is also essential to restoring confidence among suppliers, regulators, and investors. This includes building a 13-week cash flow model, working closely with the court-appointed Monitor, and maintaining a disciplined communications strategy.<\/p>\n\n\n\n

Restoring confidence post-restructuring<\/h2>\n\n\n\n

Emerging from CCAA proceedings is not just a financial reset \u2013 it\u2019s a reputational one. Rebuilding trust with stakeholders requires clarity, transparency, and improved governance. Cannabis companies seeking to re-establish their market position should focus on:<\/p>\n\n\n\n