Colorado-Based Cannabis MSO Schwazze Defaults on $700,000 Loan Payment, Triggering Cash Control Measures

Colorado-based marijuana multistate operator (MSO) Schwazze has defaulted on a restructured loan after failing to make a scheduled $700,000 payment due on March 3. This latest financial setback adds to the growing concerns surrounding the company’s stability amid broader industry struggles.

Bankruptcy Consultant Exercises Control Over Schwazze’s Cash Reserves Following Default

In response to the missed payment, Atlanta-based bankruptcy consulting firm GGG Partners, which Schwazze enlisted last summer to help refinance its debt, exercised control over approximately $1.5 million in cash held in Schwazze’s bank accounts. This action was detailed in a March 13 filing with the U.S. Securities and Exchange Commission (SEC), underscoring the severity of the company’s financial troubles.

Despite inquiries, neither Schwazze nor GGG Partners have responded to requests for comments regarding the default and the subsequent financial measures.

Schwazze’s Financial Challenges Continue Amid Market Pressures and Regulatory Shifts

The default on the restructured loan marks yet another challenge for Schwazze, which operates cannabis retail outlets across Colorado and New Mexico. The company’s financial position has been deteriorating over time, compounded by regulatory hurdles and an increasingly competitive cannabis market.

Previously, Schwazze’s shares were listed on the NEO Exchange (now known as Cboe Canada) and over-the-counter (OTC) markets under the ticker symbol SHWZ. However, in July 2023, the company transitioned to the OTC Expert Market, where quotes are available on an “Unsolicited Only” basis. This market restricts visibility to broker-dealers and professional investors, limiting public transparency and reducing investor confidence.

Debt Restructuring and Ongoing Financial Scrutiny Highlight Schwazze’s Struggles

Schwazze has been grappling with a significant debt burden for some time. In July 2023, the company restructured $32 million in debt that was originally due in February 2025. While many cannabis operators are facing substantial debt obligations over the next 12 to 18 months, Schwazze’s financial obligations appear to have accelerated at an alarming rate.

In December 2023, the company further raised concerns when it announced that previously issued financial reports detailing its operations from earlier that year should “no longer be relied upon.” This disclosure sent shockwaves through investors and industry analysts, fueling speculation about Schwazze’s financial health and corporate governance practices.

Schwazze’s Past Legal Troubles and Cash Settlement for Wage-Theft Claim Add to Financial Woes

Adding to its turbulent financial trajectory, Schwazze faced legal troubles in 2023 related to labor practices. In the months leading up to the debt restructuring, the company paid $525,000 to settle a wage-theft claim filed by former budtenders. While this settlement may have closed the case, it further strained the company’s cash flow and contributed to ongoing concerns about its operational sustainability.

Schwazze’s Historical Evolution and Current Market Standing Amid Debt Burden

Originally known as Medicine Man Technologies, Schwazze underwent a rebranding in April 2020. Shortly after, it severed ties with Medicine Man Denver, a well-known cannabis cultivator and retailer. Since then, the company has pursued expansion efforts while simultaneously struggling to manage its financial obligations.

As of November 2023, Schwazze’s total debt stood at a staggering $196 million, as reflected in preliminary third-quarter filings. The company’s future remains uncertain as it continues to navigate mounting financial pressures, legal complexities, and industry-wide challenges.

What’s Next for Schwazze and the Broader Cannabis Industry?

Schwazze’s default on its restructured loan serves as a cautionary tale for other cannabis operators facing similar financial constraints. The broader marijuana industry is grappling with overregulation, market saturation, and capital access limitations, making it increasingly difficult for companies to stay afloat.

Moving forward, industry analysts and investors will be closely monitoring Schwazze’s next steps, particularly whether the company can negotiate further financial restructuring or attract new capital to sustain its operations. Until then, Schwazze’s troubles highlight the volatility and financial uncertainties that continue to challenge the legal cannabis sector in 2025.