Cannabis Musings - February 5, 2026
Forbearing Cannabist.
Friends – the cannabis industry is a real mixed bag. You’ve got some companies that are finding their niche, playing it tight, and earning that golden kreplach of modest success (which, on the bell curve of industry performance, is a few standard deviations away from the norm). You’ve got a lot of operators that are barely treading water, relying upon the mutually assured destruction of suppliers and taxing authorities to continue to finance them with (very) extended payables terms, rather than demanding payment and filing suit. And then you’ve got those companies that have hit the wall with lenders that are not quite as willing to “extend-and-pretend.”
We saw this with Ayr, we saw this with Eaze, we saw this with Flower One, we saw this with 4Front, and now, we’re seeing this happen with The Cannabist Company née Columbia Care. Earlier this week, the US multistate operator disclosed that it has entered into a Forbearance Agreement with the holders of more than three-quarters of its about $270 million of senior secured notes (loans that have priority liens on assets of the company) due in 2028. Sadly, the filed Forbearance Agreement has redacted the names of the noteholders who signed it, so we don’t know who’s on the other side of this (one guess might be FiSai, which rattled the cage in late 2024, but we don’t know if they’re still owners of the debt) but Cannabist did file the agreement, which is appreciated.
A forbearance agreement is about as dire as it sounds – it means that there’s been some sort of default on debt (usually, as in this case, a failure to pay interest on time), and the lenders are threatening to exercise their rights to sue, foreclose on the assets, and do all sorts of unpaid lender-type things, but the company has a plan to solve the problem and needs some time to execute on that plan, so the lenders graciously agree to hold off on doing all those unpaid lender-type things for a short period of time (here, 17 days), while keeping a tight rein on the borrower’s operations, sometimes taking a fee for their grace (unclear here), and always getting releases from the borrower (definitely) .
A few weeks back, we talked briefly about how Cannabist had agreed to sell its Virginia assets to Millstreet Credit Fund LP:
Millstreet has been a large investor in MSOs in the past, playing the debt of Acreage Holdings, and the stock and debt of Ayr Wellness, so this seems to be another move towards also accumulating passels of assets for the fund.
Millstreet ambitiously outbid Curaleaf’s prior bid by about $20 million (about 18%). Although Curaleaf and Cannabist had entered into a binding agreement, the deal included a “go-shop”, a ten-shekel term for “the board of directors wants to cover its tuches and make sure they’ve got the best offer they can find.” This arises from basic corporate fiduciary duties that the board owes to its shareholders to maximize value (which isn’t always the highest price, but that’s usually the main driver), but at heart comes from not wanting to get sued by shareholders who might argue that the board didn’t explore all options when it negotiated and signed a deal with a suitor. So, once the is signed and announced, the board may direct the company’s investment bankers to run a broadly-marketed process to find a better deal, usually within a fairly short period of time (weeks). This is very standard stuff in public mergers and acquisitions. Millstreet took the bait in this particular situation and topped Curaleaf’s bid.
Millstreet is now waiting to close on its purchase of Cannabist’s Virginia assets in a deal that got signed after Cannabist decided to not make its December 31, 2025, interest payment on its Senior Secured Notes (per the press release), and those unpaid Noteholders have now apparently threatened to make waves, which may or may not help with the Virginia sale. Now, we don’t know if Millstreet is one of the Noteholders who also signed the Forbearance Agreement, if it’s a Noteholder that didn’t sign the Forbearance Agreement, or if Millstreet doesn’t even hold any of Cannabist’s Notes. Nonetheless, each of those scenarios ensures very delicate conversations among the parties. All we can do is speculate.
What makes all of this even more interesting (for finance and restructuring geeks) is the fact that Cannabist can’t file for bankruptcy, because cannabis. Sometimes a borrower uses its time under the forbearance agreement to plan for filing bankruptcy, with or without the support of the forbearing lenders. When it’s with that support, the borrower is probably working with its lenders to devise a “prepackaged” plan to file for bankruptcy and hand over the keys to said lenders, while also arranging for financing to help keep the lights on during the process. But that’s not happening here, and the strongest arrow in a borrower’s quiver of negotiating leverage tools isn’t there for Cannabist.
Without bankruptcy, Cannabist’s best leverage instead is the hope that the lenders don’t really want to take over and operate a licensed cannabis company. That’s generally been the dynamic between operators and creditors in the industry – it’s hard to foreclose on cannabis licenses and product, and institutional lenders like the credit funds in the space aren’t keen on running that kind of business. However, we’ve seen that shift as of late, such as in the aforementioned Millstreet’s takeover of Ayr by agreeing to convert debt into equity. This is a very traditional finance playbook, and it’s no surprise it’s taken more hold in cannabis. It’s not as attractive to extend and hope for a turnaround when there’s little promise on the horizon policy-wise.
So, what then is happening here? Being on the outside of negotiations, we won’t know for sure until the next public announcement, but it’s likely one of two scenarios. Either Cannabist is negotiating for more time to get the Virginia deal closed and tweak the debt terms in order to carve a path towards making good on its interest payments (and maybe to swap out some of the Notes for new debt, although that’s less likely because the Notes aren’t due for two more years, which is an eternity), or it’s going to agree to swap some/all of the debt for some/all of the equity. Or something in-between. Hopefully, ideally, whatever the result, Cannabist will be able to retain jobs for its employees and continue to fight another day.
As observers of the macro dynamics of the cannabis industry, these Cannabis Musings have been expecting this more aggressive type of approach from investors, using debt as an acquisition tool (“loan-to-own,” as it’s known). If this is the cannabis M&A trend that seemingly everyone else has been talking about as of late, it’s not going to be pretty.
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Finally, a note. You may have read recently lamentations regarding the proliferation of AI-generated content, with some of the tell-tale signs being (i) the use of em-dashes, (ii) adherence to the Oxford comma, and (iii) too many bullet-pointed lists. We here at Cannabis Musings have always exploited the narrative usefulness of the em-dash, champion the correctness of the Oxford comma, and appreciate the organizational utility of bullet points. So, in case you were wondering, none of Cannabis Musings is ever drafted by a large language model. Of course, that’s what the AI would say if it were trying to deceive you, but you’re just going to have to take my word for it.
Be seeing you.
© 2026 Marc Hauser. None of the foregoing is legal, investment, or any other sort of advice, and it may not be relied upon in any manner, shape, or form. The foregoing represents my own views and not those of Jardín, B&Y Ventures, or anyone else who employs/hires me.
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