Leading California Distributor Herbl Closes Amid Pressure On The Industry
November 21, 2023California’s largest cannabis distributor, Herbl, has failed, according to new reports from San Francisco’s SFGate. The company’s collapse follows in the wake of other major cannabis startups to face extreme financial challenges like Flow Kana and MedMen. Herbl’s collapse leaves many smaller growers and retailers in a challenging situation during a difficult year for the legal cannabis industry.
The company’s fall from grace came after a period of rapid growth: founded in 2016, Herbl sold over $700 million in cannabis in 2022 while delivering to over 1,000 retailers in the Golden State. According to SFGate, Herbl was the largest cannabis distributor in California from 2018 to 2022.
In an interview with SNDC last year, Herbl founder Mike Beaudry cited the slow pace of retail opening in California as a major pressure on the industry. “There are now about 1,000 cannabis retail doors in California,” he said. “That’s not even remotely at a point where there’s ease of accessibility for consumers to go to a retail shop and buy cannabis.”
The decline began in January 2022 when Raw Garden, among the leading producers in the state, ended its distribution contract with Herbl. The loss, combined with carrying a large amount of the debt for the wider industry, began to pull Herbl under. In June of this year, East West Bank cut off Herbl’s line of credit, leading the company to enter receivership.
Herbl owes producers over $2 million in back payments and is owed nearly the same amount by retailers across the state. When the company’s assets were auctioned in September, the highest valuation was given to the rights to Herbl’s breach of contract lawsuit against Raw Garden.—Shane English
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