Agenda packet — Paso Robles City Council, August 19, 2025 (part 4 of 4)

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BREAKING
Ghost ship drifts into Northern Calif. waters with no souls aboard CAI\II\IABIS Follow
UC San Francisco study uncovers troubling
new cannabis health risk
Marijuana edibles may not be as safe as doctors had previously thought By Lester Black, Cannabis editor
May 29, 2025

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- SFGATE l\lewsletters Sign in
FILE: Marijuana plants produce an intoxicating chemical called THC, which is often infused into a variety of edible products.

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Researchers at UC San Francisco published a study Wednesday that found troubling cardiovascular risks linked to using cannabis, even for people who avoided smoking cannabis entirely.

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SFGATE
The study tested 55 people from the Bay Area to see if their cardiovascular function was different depending on whether they used smoked cannabis, used cannabis edibles or abstained from cannabis entirely. The research found that regular cannabis users - both edible users and cannabis smokers - had reduced cardiovascular function and increased risk of developing premature heart disease.

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r.

The study joins a growing body of evidence that chronic cannabis use could be damaging cannabis users' cardiovascular system. A 2024 study evaluating survey data found that daily marijuana use was associated with a 25% increase in risk of heart attack and a 42% increased risk of stroke, but this is one of the first studies that measured cardiovascular function in healthy adults who strictly used cannabis edibles without smoking, according to UCSF researcher and lead author Leila Mohammadi.

The findings that even people using only THC edibles without smoking still showed signs of cardiovascular damage surprised Matthew Springer, a UCSF researcher and another author on the study. Edibles have been seen as possibly less likely to damage the heart, according to a 2020 recommendation by the American Heart Association.

FILE: UCSF Medical Center is a research and teaching hospital in San Francisco.

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"When I first saw the THC result, I said to Leila, 'Scientifically, this THC result is really interesting but boy does it screw up the public health messaging,"' Springer said.

The UCSF study tested cardiovascular function with a two-part test. First, they conducted ultrasounds of an artery in each subject's arm to see how blood flow changed after being constricted with a blood pressure cuff. The ultrasound study found that both cannabis smokers and cannabis edible users had arteries with lower dilation rates compared to people who did not consume cannabis.

The study then examined blood serum from test subjects to see how it reacted to endothelial cells, which regulate blood flow. This test found that cannabis smokers, but not edible users, produced less nitric oxide levels, which is an indicator of cardiovascular health. The drop in nitric oxide levels seen in marijuana smokers was similar to earlier research on the effects of smoking tobacco, according to the study.

Springer said the fact that edible-only users showed signs of damage on the dilution test but not the nitric oxide test, while cannabis smokers showed damage on both tests, shows that THC alone without smoking could be directly damaging the vascular system. He said that could be evidence that smoking marijuana could be causing a "double whammy" of negative effects on heart health.

The study authors tested all subjects for nicotine exposure to make sure none of the participants used tobacco.

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Taken together, these findings indicate that using THC is associated with an increased risk of developing heart disease early, according to the study.

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FILE: Kiva Confections employees package cannabis gummies into individual containers at Kiva's factory in Oakland, Calif., on May 16, 2025.

Douglas Zimmerman/SFGATE
The study did not prove a causal relationship between consuming THC and heart disease, but Springer said that because this latest study found early warning signs of heart disease in healthy subjects that confirm earlier studies, "we can be pretty confident" that cannabis use causes damage to the cardiovascular system.

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Benjamin Caplan, a Massachusetts medical doctor who specializes in medica cannabis use, said in an email that the study "raises important questions" bu

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short of providing "convincing evidence of cardiovascular damage from cannabis use." Caplan said the study did not control for what specific cannabis products subjects used or their diet, body mass index, or lifestyle factors and contained only one woman in the edible group, which he said limits its generalizability.

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"This study says nothing about what happens when cannabis is used thoughtfully, in low doses, under medical supervision, or as part of a broader care plan," Caplan said. "It doesn't reflect the patients I see - older adults tapering off opioids, cancer survivors managing pain, or anxious individuals finally sleeping through the night. It's a narrow lens applied to a very broad subject."
The study's subjects were all regular users who used cannabis at least three times a week, and the cardiovascular harm was stronger for people who used more THC a week, which Springer said is a sign that even using less cannabis could spare

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from the heaviest cardiovascular harm: "It really does seem like the more you take, the worse it is."
More Cannabis Coverage
- One of California's most expensive licenses is now basically worthless - How weed drinks became the only winner of California's legal weed market - UC San Francisco study uncovers troubling new cannabis health risk - Gavin Newsom can't stop California's pot companies from jumping to hemp - 'This is freaking crazy!': The rise and fall of a San Francisco party that changed the world
- Full SFGATE cannabis coverage
May 29, 2025
Lester Black

CANNABIS EDITOR
Lester Black is SFGATE's cannabis editor. He was born in Torrance, raised in Seattle, and has written for FiveThirtyEight.com, High Country News, The Guardian, The Albuquerque Journal, The Tennessean, and many other publications. He was previously the cannabis columnist for The Stranger.

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BREAKING
Ghost ship drifts into Northern Calif. waters with no souls aboard CANNABIS '.;11,w,•
One of California's most expensive licenses
is now basically worthless
The interior of Gorilla Rx is seen on April 23, 2025, in Los Angeles.

Jessie Alcheh/SFGATE
By Lester Black, Cannabis editor
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June 11, 2025
► 0 Listen Now: [t's never been cheaper to get a license to sell po1 1x
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A license to legally sell cannabis in California was once a coveted item, with some selling for millions of dollars. But now, as the California market's struggles have left ~ SFGATE Newsletters Sign in
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Case in point: One cannabis company is offering its retail license in the Southern California city of Oxnard for "free" to anyone who will assume responsibility for paying the lease on the retail location, which has not yet opened for business

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listing still prices the license at $35,000, but broker Meilad Rafiei confirmed to SFGATE the seller is willing to walk away without getting any cash. "From day one I was telling [the license holders], I don't know if there's any value here," Rafiei said.

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Rafiei, the CEO of cannabis industry consulting firm WeCann, said the Oxnard license could have once been sold for as much as $3 million, making the curr

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deal a stunning drop in value.

Ryan George, the CEO of 420Property.com, which is a marketplace for cannabis licenses and real estate, said during the early years of legalization, licenses could trade from $500,000 to $3 million, with one Santa Ana license selling for $8 million.

Now he's increasingly seeing licenses trade for free as they become "effectively worthless" in certain areas.
"Fast forward to today, and the picture has changed dramatically. Market saturation, regulatory challenges, and competition from the illicit market have driven values down," George said in an email.

Fl LE: Sustainable cannabis farmer Dylan Turner applies fertilizer to a crop of plants at Sunbol Farms, a small family farm run by Sunshine and Eric Johnston in Humboldt County, Calif., 2076.

Robert Gauthier/Los Angeles Times via Getty Images
5,

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The downfall is driven by multiple factors that have all come together in a perfect storm. Entrepreneurs likely overvalued the licenses when the market first opened in 2018, expecting that cannabis retailers would be printing cash. Licensed pot stores across the state are heavily concentrated in the few cities where selling cannabis is allowed, creating extreme local competition.

California's legal market also continues to underperform, with illegal cannabis stores supplying the majority of cannabis consumed in the state, according to government estimates. That has resulted in California's low per-capita sales and starved cannabis stores from attracting the customers they expected.

Palm Springs and the surrounding towns, where pot stores initially proliferated but are now rapidly closing, has been one of the hardest-hit areas. Rafiei, who said his company has brokered over $300 million in cannabis deals, said entrepreneurs are taking over cannabis stores in the region without handing over any cash. "If anyone is interested in going into Palm Springs, they're looking to steal a business and just get it for nothing," Rafiei said. "Palm Springs is one of the worst horror stories in terms of what we're talking about."
Rafiei said the biggest hindrance to selling the Oxnard license is the fact that the city charges a $250,000 fee to open a pot store, a cost that any presumptive buyer would have to absorb before opening. He said his clients initially listed the license at $300,000, then dropped the price to $150,000.

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"We got a few hits, but no one was serious, especially once they learned about the crazy fee," Rafiei said.

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FILE: Homes on Hollywood Beach and Channel Islands Harbor in Oxnard, Calif., on May 15, 2018.

Paul Harris/Getty Images
The seller eventually dropped it to $35,000, before finally telling Rafiei that they could "just walk away" from the Oxnard license. He said dropping the sticker price on the license to zero has finally attracted some viable offers.

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"We haven't gotten a deal done, but we do have some serious people looking now, and it looks like we might make it happen," Rafiei said.

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June 11, 2025

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BREAKING
Ghost ship drifts into Northern Calif. waters with no souls aboard CANNABIS f'ollow
Major Calif. city increases pot tax rate even
as sales decline nearly 50%
Los Angeles and San Diego are both raising cannabis fees By Lester Black, Cannabis editor
Aug 7, 2025

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Workers at a legal cannabis farm in California process cured marijuana flower.

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n Listen Now: California cities increase pot costs even as 3:24
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California's two largest cities are ratcheting up fees and taxes on the legal cannabis industry even as retailers shutter and the entire legal market sputters with tax revenue dropping significantly.

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San Diego is squeezing its legal cannabis industry as it faces a dire cannabis market.

Sales inside the city of San Diego have fallen nearly 50% in the latest fiscal year compared to sales in fiscal year 2021, according to NBC San Diego (KNSD-TV).

Despite the sales decline, the San Diego City Council voted in March to raise the cannabis tax rate from 8% to 10% to raise revenue while the city faces a broader budget crisis.

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Pot shops in the state's largest city are facing a similar situation. The Los Angeles City Council voted unanimously this week to increase licensing fees for legal stores because falling cannabis licensing revenue is no longer bringing in enough money to support their marijuana regulator, which has nearly doubled its staff in recent years, according to the Los Angeles Times. Luis Rivera, the owner of a delivery service, told the paper the fee increase would be "disastrous."
Legal cannabis sales are sharply contracting in the city, with cannabis sales dropping 20% in the previous quarter compared to a year earlier, according to state data. Sales have dropped 41% compared to the same quarter in 2021.

A staff member shows products to a customer at Gorilla Rx on Apdl 23, 2025, in Los Angeles.

Jessie Alcheh/SFGATE

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Timothy Dodd, the CEO and co-founder of the Sweet Flower retail chain, said the new fee rates, which will increase from $8,486 to $12,617 for a license renewal, are loosely aligned with fees in other cities, but said LA's high tax rate and inability to shut down the illicit stores has left operators with no way to pay. "Many of the remaining LA retailers are on the verge of closing and personal bankruptcy now. They don't have any extra funds for more fees," Dodd said in an email.

LA has been plagued by illegal cannabis stores that operate without paying any cannabis fees or taxes. Todd said the higher costs make it hard to justify paying for licensing fees at all.
"In the current state of affairs, you could argue that cannabis operators are better off operating without a license. The fee increase just solidifies that argument," Dodd said.

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Products are seen inside of Gorilla Rx on April 23, 2025, in Los Angeles.

Jessie Alcheh/SFGATE
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Cannabis industry experts have been warning tor years that California's high regulatory costs and taxes are stifling the legal industry. The state saw the biggest sales decline in legalization history in the first quarter of 2025, with an 11% drop in sales compared to the same quarter a year earlier. That sales drop appeared to be largely because customers were buying cheaper, not fewer, products, with overall unit sales increasing slightly.

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The industry's warnings have largely gone unheeded. Not only have the state's two largest cities increased the costs of doing legal business, but the state government has also increased legal cannabis taxes. The state increased the excise tax rate from 15% to 19%, an increase of 26%, this July.

While the legal industry falters, California's illicit cannabis industry continues to thrive. According to the state's own estimates, illegal cannabis sales still outnumber legal sales by a healthy margin.

More Cannabis Coverage
- One of California's most expensive licenses is now basically worthless - How weed drinks became the only winner of California's legal weed market - UC San Francisco study uncovers troubling new cannabis health risk - Gavin Newsom can't stop California's pot companies from jumping to hemp - 'This is freaking crazy!': The rise and fall of a San Francisco party that changed world

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Most analysts contend that companies have enough time to craft solutions to refinance their debt on favorable terms.

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However, some factors not under the industry's control - such as major federal or state reforms that could open new markets and ease operations for existing companies, or a total lack thereof - will also determine whether companies are forced to sell assets, disappear entirely or cede more control to their lenders, observers told MJBizDaily. "It paints a concerning picture," said Jesse Redmond, a California-based analyst and head of cannabis at Water Tower Research, an investment advisory firm. "I think anyone investing in cannabis has to be concerned," he added. "I don't know if it's to the point where it's dire or not, but it's not obvious what's going to happen" to some of the more leveraged companies.

And as a well-publicized letter to struggling multistate operator The Cannabist Co, from one of its creditors shows, some lenders aren't waiting to impose demands.

Debt financing not unique but ...

Subject to much heavier tax and regulatory burdens than businesses in other sectors, the $32 billion U.S. cannabis industry i£.stilUypkaJ jn at lease one way .(hllps· //www investopedla.comlask/answcrs/042215/what-a re-benc!lts-comp.any-using::
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It's not extraordinary for companies to carry significant loan debt, even debt in the nine figures. (That's distinct from the estimated $4 billion (htt~.prnews;vlre c:oJJllo!'W$:; ru!ease,~[cash:-starved-caooi1WS=.Ql1er:aiors-tonped-3-6-hillioo-in::<lelirulUflll:PilYOO!?uts-in2023-302101.100 html) in delinquent payments and past-due invoices owed within the industry, according to Oregon-based Whitney Economics.) It's also typical for debtors to continuously refinance loans for years on end, as paying it all off "means having a bunch of cash lying around," said Frank Colombo, who has followed the debt situation closely as a managing partner at New York-headquartered cannabis capital, M&A and strategic advisory firm Viridian Capital Advisors.

That leaves companies with two options once a loan matures: Refinance the debt or restructure the company.
"You refinance," Colombo added. "Or you have a problem." And some over-leveraged firms have problems.

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Estimates of how much debt is coming due in 2026 vary from as low as $2 billion, as Viridian's Colombo pegs the figure, to as much as Sl bUlloo (https·ll(jsal rom/pri:,-;s-cclcases/Fjfull-CBSTll2::26:::2!bpdfl., as noted in a September public letter to The Cannabist's board from FiSai US Management, a Los Angeles-area, marijuana-focused investment fund that loaned the company $50 million.

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They are:
• Curaleaf Holdings :wiltLS460 Ol~llon (httoa·/t,wm lf&dillolus ca/csa-pgrtwteco<dsJdocum0:n1J1ftnl'> id--bd84 2325[764C..827f'lffl7270914mM9tf25ct8637toOcb24Q72e6.adSbOSl19a) coming due in December 2026, Cresco Labs, $400 million, August 2026.

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Ayr Wellness, $358 millron,
Verano Holdings Corp., ~bll~pfpb@fll!YClwiOl: opm/QO,)'Q:
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Analysts note that the companies all have ~gnificant prr:;cnrcs jn Florldi!. .(hllps:ilknowthefactsmmj~1cmm/uploads/ommu updares1202s1u1m25-0MM\Jl.l!2liatf.(ll!fl, where an enonno.us.lynp_ens.jye_PJ,ISh..mlegali.z.e...(hll!l£Jlmjb.izda.ily.comltruHeveC/JIJ1JabJs-donates- 5-mHllon-morn-to-ad, 1Jr-,1s<!:campaign-jn-Oorldail adult- use cannabis - and open what would have been the fastest-growing new market in the country - failfd.in November (bllp..sJLrnjbwl.ally.comlflorlda -vorers-reiect-aduJt use-marijuana-amendment-3/l.

That also reflects what some critics say is an overreliance in the marijuana industry on outside developments to meet earnings goals or fulfill other ambitious promises.

These include state and federal reforms including rescheduljng.rnarijuana under federal law .(hll!l£Jlmihizdally,comlblascd:dea-kcpt-colorado-m1r-of-n1arijuaoa-rescbcd11llo!!:b.eatlog:c filing::Sa.y.sL) and new state markets in populous, medical-only states such as Florida and Pennsylvania as well as - eventually - federal legalization and interstate commerce.

However, many of these companies are already banking on the tax savings they plan to realize when and if marijuana is moved to Schedule 3 of the Controlled Substances Act.

That would mean relief from Section 280E of the Internal Revenue Code, which prohibits cannabis businesses from claiming most business expenses on their federal tax returns.

But marijuana is still Schedule 1, barring the result of a highly anticipated U.S. Drug Enforcement Administration hearing scheduled to resume this month .(hllps;Jlmjllwiaily corn lhistodc-dea-madJ.uallitlfschfduliDg:lleaiiog~1ll!nS:-pauserl-11ot\l:
m.id::jarn!ilI.yl).

And the IRS has consistently said that 280E stj)) a12plies_(hll!l£Jlmjb.izdillly.rnm/irs-warnsmarii=opcra1ors-1hat-2soe:raxes-sr111-must-be-traid.llSome observers have come to understand the insistence by MSO J..llat..they don't owe taxes .(hllps;Jimiblzilili(ytom/marijnana-msos-set-ulchigh=Iiskcfight-wJtb•in,-ovec-2soe11. under 280E is another type of loan, one that might need to be repaid to the IRS with interest.

However the 280E situation is categorized, it reflects an ethos that an increasing number of investors and analysts say is risky and unreliable.
"Expecting things to change based on politics generally has never worked out for this industry," Marc Hauser, the chief of staff at Las Vegas-based Jardin and a former deal and capital markets attorney, told MJB/zDaily.

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The Cannabist Co., formerly known as Columbia Care, also has $)85 mjJJjon io debt matu ring .(hllps:l/fisaj,comlpress-relcaseslFiSal-CRS'.I':Q2-26-Z'• pdf). in February 2026, as noted in a September public letter to its board from FiSai US Management which loaned the company $SO million.

That letter also critiqued The Cannabist's reliance on last-second restructuring or outside political developments to boost its fortunes.

The letter mentioned the presidential election, rescheduling and the Florida legalization vote as "events with potential to materially impact" the firm's access to capital and its ability to refinance its current obligations.
"A 'pray and hope' strategy that all these events go in the Company's favor without engaging with creditors to explore contingency strategies is misguided and unacceptable," the letter noted, in part.

Page 644 of 651 ends

Q2 - Public Comment
Powell, Murray
wilY~mD
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In private conversations and on social media, many investors and regulated marijuana operators expect President-elect Donald Trump's administration robe cannabis-frjendly .(https;JLrnj~com/are-repubticaos-foend-or-Cor=of-1he-state rcgulaccd-macii= .indl.lstryl)., though it's far from clear what reform measures the once-and-future president might convince a partisan Congress to pass.

Viridian's Colombo preached caution in his interview with MJBizD,1ily, saying that "it's premature to panic" over the looming debt situation.

And some companies already have managed to refinance.

Ayr Wellness' debt was supposed to come due in 2024, but the company managed to pull off a deal early last year ro excend terms to 2026 !htt~iblzclaily.comlmarjjuana-mso:ayr~ welloess-comp!etes-debt-exteusion-raises-40-roillionl).

But that also meant accepting a higher interest rate as well as stronger lender control over the company.

That's a reflection of the significant decisions looming for some companies, Water Tower's Redmond predicted.

Solutions could include an uptick in merger and acquisition activity - though companies are unlikely to want to acquire underperforming stores or extra cultivation capacity when they have plenty of both in their own portfolio.
"If there's no obvious way to grow revenue and you need more cash flow ... your only option is to get leaner," Redmond said.

But lenders are also in a bind. They generally don't want to either own a borrower's assets or take over the company.

In this way, everyone could be left holding the proverbial bag. "It's a pretty intractable problem, and there are no good solutions," Hauser said. "The only solution is legalization, and that's not happening anytime soon." Chris Roberts can be reached at chris roberts{g]JJJj/JlzdiJJJy&JIIJ (rna ii ro·chris [email protected]).

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Powell, Murray
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Q2 - Public Comment
Powell, Murray
That includes shutting down licensed locations and even moving a pre-roll machine from one location to another in an attempt to elude creditors, according to a lawsuit filed earlier this month.

Those are some of the allegations made against Colorado-based Medicine Man Technologies, which dal!S business as Schwazze (hUps;JJmjbizd.iill.y,com/mar jj~ man-technoiogjes-rebrands-as-schwaz,,e/), by one of its lenders, Virginia-based cannabiscentric investment fund Altmore Capital, in a lawsuit filed May 3 in Denver District Court.

The techniques Schwazze is allegedly using to delay repaying Altmore are familiar to highyield markets but "seem like a new development in cannabis restructuring," said Frank Colombo, a managing director at New York-headquartered investment banking and data firm Viridian Capital Advisors.

But the situation might also portend a halt to the stalling tactics that ha11e so far avoided any major reckoning, such as an adjustment of cannabis companies' valuations or of the loans offered them.
"In terms of a harbinger of things to come, we've seen multiple rounds of 'extend and pretend' stuff done:' Colombo added.
"I've been arguing we're coming to a time where you need to try to fix these companies."

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Lender claims company is 'insolvent'
In its lawsuit, Altmore claims Schwazze - whtcb bas repor1ed nearly S200 mllijon jn deht .(htt!2SJLwwwglobenewswirecom1news-rcleasef202t.111/07f22771 5JI0/cn/ScbwazzcADDO\mCes-Pn:llroloary::'.thiid::Quartcr-2024-Etoaoclal-Resu1ts hrrnl) and liabilities far outstripping assets - is "insolvent."
Altmore is requesting, in part, that a judge appoint a receiver to divvy up the company.

The cannabis-specific lender declined to comment to MJBizDaily.

MJBizDailyefforts to contact Schwazze were unsuccessful.

But Schwazze spokesperson Sean Mansouri told BusinessDen that the company "vehemently den.(ieli)" devalulng.as.sets..(https·//b11sfnessden com1202stos1201lender-says-denver::Ormmay-rJose-dispensarles-ro-avoidcpay.lng::llmLl and "intend(s) to vigorously defend ourselves through the appropriate legal channels."

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The company "had to make strategic decisions about how and when to allocate resources, including the timing of certain payments," Mansouri told BusinessDen.

But the situation also could portend significant revaluations of cannabis companies that racked up debt in a bygone boom market as lenders fight over what's left, said Hirsh Jain, a California-based consultant and University of Nevada, Las Vegas law school lecturer. 'Zombie companies' using 'questionable tactics'
Schwazze is likely to be among the first of a wave of companies that "do not have the money to repay their debt obligations and may resort to questionable tactics to avoid repaying these debts:• Jain added.
"Like Schwazze, these MSOs may continue to operate for some time - retaining employees and serving customers - but they will in some respect be 'zombie companies' whose financial health is long past salvageable and whose lenders may get stuck incurring significant losses." Schwazze, which once listed its shares on the over-the-counter markets and the NEO Exchange /now known as Choe Canada (h.ttps;Jlmjbizdaily,com/crcsco-labs-cofnmbia-care1eoninare-planned"rannabls-mergerl)), tran·s1t1oned last July. .(htt~globenewswlce corotoews-releasef2024/07/0J 12907072/Qten/SchwazzeAnnonocrs::Tcausitioo-to-:OTC-Expert-Market-and-Provides-Update-on-Delay~g.htm!) to the OTC Expert Market, which is closed to retail investors.

Then, in December, the company announced that its financial reports from 2023 and 2022 "should no longer be relied upon" because of "certain accounting errors that require corrections."
Not long after that, the U.S. Securities and Exchange Commission Slllitlellded rhc accmmrao.c .(https· l/www sec goy1Arcblves/edgar1datal)6228721PQPJ J046592503Q5C>J /tm253 JOCJ2d l mJOk b tm) whom Schwazze had hired as its independent auditor, according to an April 1 filing that said reports from 2024 also would be late.
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More recently, Schwazze announced the.April 30 exit of Daniel Pabon (hJ:tps· llwww;sec gov/ix? doc=IAccbivesledgarldara100016228791QQPUQ't6592SQ1,5P29/tm251't177dt Bis tum), the company's chief policy and regulatory affairs officer.
'Insolvent' company claims owed $196 million
According to filings, Schwazze operates:
30 marijuana stores, one manufacturer and four cultivation sites in Colorado. 33 marijuana stores, two manufacturers and two cultivation sites in New Mexico, The company reported holding total dchI o{ $196 mjlljon (bttps;JLwwwglohenewswlre comtoews-release1,02t.1111oy297715310/J!,n/Si:lllY~ Announces-Prellwloary.:Third:.Quartcr-2024-~1nanciaJ-Results html} in preliminary thirdquarter filings made in November.

According to the lawsuit and previous filiog!L(bttps:1/lr schwazze com/news-rcleases/newsrelease-<letailslschwazze::announces-res1ructudng-:felm.!ary-2025-debt-obllgation.s), the debt includes:
$95 million loaned by Chicago Atlantic in December 202L $15 million from Altmore in February 2021 -
$17 million from Reynold Greenleaf & Associates.

As MJBlz0,1ilypreviously reported, another lender, Atlanta-based GGG Partners, "exercised control" of $J.5 million in cash (https;JLmjllizdallycomfmarlju.ana.:,pperatm,_schwzz<~ defaulrs-on-rgsrrucmred-dcbtl) from Schwazze's bank accounts after the marijuana operator missed a $700,000 payment March 3 and defaulted on a restructured loan, according to SEC filings.

According to the suit, Schwazze missed a March loan payment, then informed Altmore it would classify four stores, one grow and a manufacturing location as "bad collateral" protected from the lender's claims and shut them down unless Altmore reduced Schwazze's debt by 70%.

Altmore's suit also claims it was informed by Schwazze that it was forming a new company that would acquire the "good collateral" and that Chicago Atlantic "was leading the negotiations."
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In addition to allegedly shuttling around a pre-roll machine, Altmore's lawsuit accuses Schwazze of overstating operational costs by nearly 400% - part of an effort to cajole more cash from its lender.

In all, it appears Schwazze "is simply the one of the most dramatic examples of a phenomenon seen throughout the industry;• Jain said.

Altmore made its loan to Schwazze in 2021, when annual sales and company valuations were at an all-time high.

That year, for example, Colorado recorded a staggering $2 2 bjlljon in marijuana sales !lill~ibl zdailY comkolorados-2021-cannabis-saJes-set-another:-annual-record-at-2-22- b.ill.ionD.

But that "temporary sales bonanza" was a false dawn fueled in part by COVID-19 stimulus checks, Jain noted.

In 2024, Colorado's marijuana sales mmbJed to $1/t biUion (https;JJmjbizdailytom/coloradoIllill'ijmma-saJes-fall-by-20-milllon-ln-early.:2Q251), the lowest annual total for the market since 2016.
"In that context, it is hardly surprising that Schwazze's debts now surpass its assets and it finds itself unable to repay this loan to Altmore;' Jain said.

Chris Roberts can be reached at chcls,rob,:rts@mjbizdaflv,com (mailro·chris [email protected];Cllllll.

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..
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Paso Robles City CouncilAugust 19, 2025

Paso Robles City Council
August 19, 2025