Cannabis Dispensary Receivership: Orderly Wind-Down and License Surrender

The Challenge

A Colorado state court appointed a receiver to manage and wind down a Denver cannabis dispensary following the founding operator's conviction for investor fraud. The dispensary held a valid Retail Marijuana Store license from the Colorado Marijuana Enforcement Division (MED) and had approximately $1.2M in inventory and equipment.

The receiver retained Hoban Law Group for cannabis-specific regulatory guidance. The core challenges: (1) MED regulations impose strict requirements on receivership-operated cannabis businesses — the receiver needed MED approval to take operational control; (2) the license was potentially forfeitable if violations occurred during the receivership period; (3) the receiver needed to maximize asset recovery for the defrauded investors while complying with MED's controlled-substance inventory protocols.

Our Approach

MED Receivership Notice. We immediately notified the MED of the court-ordered receivership and filed the required Change in Financial Interest documentation. MED's cannabis receivership procedures required the receiver to obtain a temporary operator license — we guided that application process, which was completed in 22 days.

Inventory Safeguards. Hoban Law Group coordinated with the receiver and MED to implement an inventory count and manifesting protocol under METRC, Colorado's seed-to-sale tracking system. All inventory was tagged, counted, and placed under MED-approved controls before the receiver took operational possession.

Sale of Business Assets. We advised the receiver on the regulatory limitations on cannabis business sales in receivership: the license itself cannot be sold as an asset, but the receiver could negotiate a purchase agreement with a licensed buyer who would simultaneously apply for a new license at the premises — a structure MED has accepted in prior receiverships. We identified three qualified buyers and structured a competitive bid process.

License Surrender. When the winning buyer's license application was accepted by MED, we coordinated the formal surrender of the existing license and the controlled transfer of inventory under METRC manifest.

The Outcome

The receivership sale process recovered $2.1M for the defrauded investor class — $1.2M from inventory transfer to the buyer at wholesale market value and $900,000 from equipment and leasehold improvement sale. The recovery represented approximately 62% of the investors' principal loss.

The MED did not impose any license violations during the receivership period. The business was wound down in compliance with all MED regulations, protecting employees during the transition and avoiding the additional losses that would have resulted from a regulatory shutdown.