Bloomberg Insights

The legal cannabis industry, like every other industry, should prepare for an economic downturn—except it’s not like any other industry. Reed Smith’s Marc Hauser and Claudia Z. Springer look at potential impact and planning needed to weather a storm.

How would the legal cannabis industry react to a downturn in the economy? Like everything else in the U.S. cannabis industry, the answer is complicated.

The legal cannabis market has enjoyed a wellspring of growth capital from investors in the U.S. and Canada over the past few years. Not only have U.S. companies tapped the Canadian public equity markets for cash; private placements of debt and equity continue to flow into the industry from specialized private equity funds, high net worth investors, and friends and family.

All of this has taken place during a period of sustained economic growth in the U.S. But what happens if the U.S. economy takes a turn for the worse?

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