California-based Gold Flora Corp. (Cboe Canada: GRAM) (OTCQB: GRAM) filed a voluntary receivership request with Los Angeles Superior Court to protect itself from various lawsuits related to its acquisition of The Parent Co. in 2023 and debts related to ongoing operations as it prepares to go up for sale.

Gold Flora noted in a press release that it’s in default on a 2024 loan from J.J. Astor & Co. in the amount of $11.5 million.

The company said it expects experienced cannabis receiver Richard Ormond of Stone Capital Blossom to be named by the court to run the business. Ormond has also been winding down and selling off MedMen Enterprises assets after that multistate operator went belly up in early 2024.

“While preparing for an orderly sale of its California operations, Gold Flora intends to continue operating as a going concern and expects to be sold as such as it retains a business consisting of 16 dispensaries and a 100,000 square foot cultivation campus,” the company stated in the release.

CEO and founder Laurie Holcomb said that the receivership request – and the upcoming sale of the company’s assets – was “a difficult but correct decision to make for all stakeholders.”

“While Gold Flora remains a leading operator and retailer in the cannabis market in California with over $100 million in annual revenues, the liabilities on our balance sheet, many of which are due to lawsuits we inherited with the TPCO business combination, forced us to file for a voluntary receivership that is necessary to achieve an orderly sale of the business,” Holcomb said.

“We believe Gold Flora’s business remains valuable and sound, but receivership is our only option to sell the business as a going concern as opposed to seeing it broken up by different creditors, which we believe is not in the best interest of any stakeholder,” she said. “The board of directors of the company determined that it was in the best interests of the company and its stakeholders to proceed with the commencement of the receivership proceedings.”

Warning signals flashed throughout 2024 for Gold Flora. In November, one of the company’s creditors requested a receivership, citing a long-overdue debt of $236,000. Separately, a “limited receiver” was appointed in October by a Delaware court to handle $1.6 million of Gold Flora’s debts.

Gold Flora has not yet released its fourth-quarter financials for 2024, but at the end of the third quarter, the company posted a $56.5 million loss for the year and was carrying $273 million in total liabilities against $96.4 million in revenue.

Gold Flora is only the latest California cannabis company to go up for sale. Others, such as MedMen, flamed out in spectacular fashion over the past few years, including High Times, Herbl, StateHouse Holdings and others.

Oklahoma, Oregon and California are the best-positioned states to benefit from the interstate commerce that would result from federal marijuana descheduling, according to a white paper published this month by the University of Nevada Las Vegas. The analysis said those states having the cheapest large-scale production costs and the highest per-capita economic potential, putting them in a better position that other state-legal cannabis markets.

The paper, authored by California-based economist Dr. Robin Goldstein of the Cannabis Economics Group at the University of California Davis, is based on the simple premise that the cannabis companies able to produce the most marijuana the cheapest are those that stand to dominate the national industry, should cannabis ever be removed fully from the list of federally controlled substances.

“The locations most likely to win in a national price competition will be places where weed can be grown and sold most cheaply,” Goldstein wrote in the report, which he titled “Where Will Weed Win?”

“The first and biggest effect of interstate commerce will be immediate competition between states on price. The initial juxtaposition of domestic and imported prices might be shocking in some states,” Goldstein wrote. “When a producer in Illinois, whose legal weed with 25% THC is fetching $1,500 per pound from Illinois retailers in the gated market, faces competition from 30% THC weed from California at $150 per pound, the legal Illinois producer encounters immediate incentives to (try to) protect its business livelihood by lobbying the state to take protectionist measures and prevent cheap out-of-state retail competition.”

Goldstein analyzed the costs of production in every state with a functional marijuana market and ranked the top 25 in order as far as which he believes are most likely to benefit from full federal cannabis legalization, with Oklahoma – perhaps surprisingly to some – in the top spot, followed by Oregon at number two, and California picking up the bronze medal.

Goldstein said Oklahoma has proven to be “America’s most efficient legal weed system” and has “vast long-term potential,” compared to New York, which he ranked as number 24 on the list.

“Low-end wholesale prices are falling 40% per year and and may not stop until they are America’s lowest,” Goldstein wrote. “The success of the no-nonsense, small-government approach to weed regulation taken by the Great Plains states like (Oklahoma and Montana) has left wonks in #24 New York scratching their heads and planning vacations to dude ranches.”

By contrast, Goldstein wrote that New York “has been a lesson in how not to legalize.”

“Retailers are finally sprouting up around cities, but they can only sell licensed weed, much of which is schwag. Illegal smoke shops already sell great imported weed,” Goldstein wrote.

The state in the final ranking of #25 was Alaska, which Goldstein found had “dim prospects for interstate exports.”

“California has the lowest wholesale prices, at $150 per pound. Illinois’ lowest price in the same time period, by compari­son, is $1,555 – more than 10 times higher,” Goldstein also noted in his analysis. The state with the second-lowest cannabis wholesale prices was Michigan, he found.

Wholesale prices, however, were only one factor the economist analyzed; he also looked at retail prices in each state, a metric under which Oregon took the top spot, followed by Oklahoma and then Colorado.

But most importantly, the ranking list was determined by per capita economic potential, which gives more weight to states with smaller populations, like Oklahoma’s 4 million residents as opposed to California’s 39 million, combined with cheap production costs and other business expenses.

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Despite years of turmoil, from sales  sales declines to thousands of licensed businesses going under, illicit market competition and countless other hurdles, serial cannabis entrepreneur Dave Spradlin thinks there’s still hope for small companies to carve out successful niches. And he’s trying to prove that with a new small retail chain in Northern California focused solely on craft cannabis from the Emerald Triangle.

Spradlin obtained a distressed dispensary in the aptly named town of Weed in Siskiyou County and began sourcing directly from small farmers in Humboldt, Mendocino and Trinity counties for his shop, which he dubbed Goldenhour. And he worked fiercely to keep costs down to see if he could turn a profit in the notoriously difficult business landscape.

“Goldenhour is either the bright new light of a new day, or it’s the last light of the night before the night,” Spradlin said. “So we’re going to give ’em hell until we figure out which path that ends up being.”

Small farmers have been largely left out of any success in the legal California marijuana trade, which has contracted drastically since new state rules went into effect in 2018. But Spradlin said there’s still arguably the best cannabis in the world being grown in the region, value that hasn’t been fully tapped.

Spradlin believes that his experience – he got started in the California marijuana trade back in 2009 and has been part of at least five cannabis companies, including as CEO of Sacramento-based chain Perfect Union – will allow him to build a platform to showcase those small growers, for both their benefit and his.

So far, it’s worked out. Since Spradlin reopened the newly rebranded Goldenhour store in Weed on April 17, 2024, sales are up 300%.

“It was definitely a big turnaround,” Spradlin said, and things are “going great” for the shop. He’s even planning a second location in the town of Point Arena in Mendocino County. He’s been carrying flower and other products from about 30 farms in the Emerald Triangle, but that’s likely to grow, as more consumers find out about the craft-focused business model.

Spradlin emphasized that he’s neither the first nor only California cannabis retailer to choose such a niche, and said others are finding similar success catering to marijuana connoisseurs that want top quality and rare strains.

“There’s other businesses that are doing similar concepts to what we’re doing … Woody Harrelson’s spot down in (West Hollywood), they have a whole section of the store that’s dedicated to craft small mom-and-pop farmers,” he noted. He also called out a delivery operator in Sacramento, Zen Life Organics, that is also primarily focused on craft marijuana.

“People love it, and I can give (craft cannabis) to the consumer at a significantly discounted rate. I can compete with any of the big boys that are vertically integrated on price,” Spradlin said. “It makes total sense, and it feeds into what’s a huge growing category across the board in every consumer category, which is conscious consumerism. People want to buy stuff that makes them feel good. They don’t want to buy some mass produced trash if they can avoid it – and if they can afford it. And we’re trying to hit both those marks.”

Spradlin believes one of the reasons for his success is also a slow and cautious approach to growth, a strategy that is in stark contrast to the widespread business philosophy across California just a few years ago of going as big as possible as fast as possible. That approach led to a lot of company failures and financial losses, Spradlin recalled, as industry insiders struggled to adapt to the harsh new regulations, taxes and competition once the state put rules in place seven years ago.

But now, Spradlin said, he believes there’s a light at the end of the tunnel. He’s seen more companies pivot and stabilize in recent times and figure out strategies that have given them at least a semblance of sustainability.

“It’s California. It’s a huge state. It’s huge market, one of the biggest markets in the world. It’s going to be fine. There’s going to be room for us. That’s why we’re trying to carve out our niche, and I think there’s going to be many other versions of Goldenhour and small mom-and-pop businesses that can thrive,” Spradlin said.

Difficulties acknowledged, Spradlin said there are pathways to success in California cannabis already today. They’re just very, very narrow, and thus few and far between.

“You have to be locked in to a very narrow view of what you’re trying to accomplish,” Spradlin said. “And what I’m trying to accomplish is create a platform to highlight what I believe is the best cannabis in the world grown by the best farmers in the world. And if I can successfully execute that, that’s a winning formula.”