Cannabis Defaults Are Piling Up: 3 Companies Just Missed Payments—Who’s At Risk Next? – Ayr Wellness (OTC:AYRWF), Ascend Wellness Holdings (OTC:AAWH)

The cannabis industry is grappling with a wave of financial distress as multiple publicly traded companies defaulted on key real estate obligations this past week. Gold Flora GRAM, 4Front Ventures FFNTF and TILT Holdings TLLTF, three major players in the cannabis sector, were all declared in default on leases held by cannabis-focused real estate investment trust (REIT) Innovative Industrial Properties IIPR. The developments highlight the mounting pressure on operators navigating a capital-starved environment, high taxation and an oversaturated market.

Gold Flora’s Collapse: A Long Time Coming

On March 27, 2025, Gold Flora filed for voluntary receivership. IIPR subsequently declared Gold Flora in default of three leases, with a total invested value of approximately $117 million and an embedded cost of around $254 per square foot.

Gold Flora’s financial struggles were not unexpected. According to a recent Viridian Capital Advisors analysis, the company had been hovering around a 5x liabilities-to-market cap ratio since late 2022—an early warning sign of distress. It officially crossed the critical 10x threshold in October 2024, a point at which Viridian noted that companies typically spiral into deeper financial trouble. The company had also experienced successive downgrades in Viridian’s Credit Ranking Model, further signaling deteriorating financial health.

4Front Ventures And TILT Holdings Face Lease Defaults

In addition to Gold Flora, 4Front Ventures and TILT Holdings were also declared in default by IIPR.

4Front’s default includes four leases, notably impacting its flagship 250,000-square-foot facility in Matteson, Illinois. The company first breached the 10x liabilities-to-market cap threshold in November 2024 and has since soared past 20x, a level Viridian considers highly distressed.

Also read: Canopy Growth’s Future Hinges On US Cannabis Regulatory Shifts, Says Analyst, Issuing ‘Neutral’ Rating

TILT Holdings, meanwhile, defaulted on two leases, including a 40,000-square-foot facility in Taunton, MA, and a 15,000-square-foot property in White Haven, PA. TILT has struggled with high leverage for years, remaining above 10x since 2022 with only brief dips between 8x and 10x. While insolvency does not necessarily trigger defaults, sustained distress and a lack of financial relief have pushed TILT to its breaking point.

Who’s Next? Key Companies To Watch

Viridian’s liabilities-to-market cap ratio is a crucial early warning indicator of financial distress. While defaults rarely occur without warning, some cannabis companies are approaching precarious levels of financial strain.

Cannabist Holdings CBST surpassed 10x liabilities-to-market cap in November 2024 and has since ballooned to 32x. However, a recent debt exchange has given the company short-term breathing room, staving off an immediate default.

Ascend Wellness Holdings AAWH crossed the 10x threshold in December 2024, remaining between 11 and 12x. Unlike Gold Flora or 4Front, Ascend has no major debt maturities until 2029, meaning its financial troubles are less likely to trigger immediate default.

AYR Wellness AYRWF, on the other hand, presents a more urgent risk. The company has an upcoming debt maturity and lacks sufficient asset coverage, making it a potential candidate for default unless it secures a refinancing solution.

The Bigger Picture: A Capital Crunch Across The Industry

These defaults highlight a broader liquidity crisis in the cannabis industry, exacerbated by limited access to traditional banking, high operating costs and declining wholesale prices. While some companies manage to secure short-term lifelines through debt restructuring, others, like Gold Flora, cannot sustain operations.

For investors, the liabilities-to-market cap ratio remains a reliable distress indicator, offering insight into which companies are at risk of default. As the market continues to face financial headwinds, more cannabis operators may find themselves on precarious financial footing in the coming months.

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