Readers might have come across this news over the past couple of days. You might recognize the name ‘Silver State’ if you’ve been following C21 Investments ($CXXI) – Silver State is name of the 2 dispensaries $CXXI has in northern Nevada.

They are also the cash cows that creditor turned CEO Sonny Newman sold to $CXXI, of which he is milking as fast as he can.

The news isn’t ‘good’ news, and carries the potential to shut the whole outfit down:

I don’t know Nevada’s state regulators, nor their disposition. Canada can be described as a relatively lax operating environment for legal cannabis producers Yes, really. I mean, how in the world does a cannabis company execute an active fraud (Canntrust) and retain a production licence? Or Bonify being caught sourcing black market product and diverting it into legal channels. While a couple of folks ‘left the company’, they got their license un-suspended after 6 months, and have been back in business since last June.

As to Nevada’s regulators, it appears they are happy to issue monetary penalties for non-compliance:

At any rate, C21 falling afoul of regulators is crazy dumb. Like spectaulary stupidly crazy moronic dumb. I mean, the entire company exists only because of the two Silver State dispensaries. Their Oregon money pit is for sale, and beyond these two retail outlets, there ain’t nothing else to be seen. If I was a shareholder, I’d be beside myself, despite the most likely outcome probably being that of a fine.

I’ve heard often that US cannabis companies can be <ahem> less rigorous around production and sales. If so, should enforcement actions by states be rigorous, it carries a genuine risk to companies who aren’t compliant. If Sonny has to cut a cheque, I’m sure he’ll make sure it clears and that it’s paid on time.

$CXXI being caught in a position like this…..a listed company jeopardizing its’ very existence…..it’s inexcusable. It’s dumb beyond words.

The preceding is the opinion of the author, and is in no way intended to be a recommendation to buy or sell any security or derivative. The author holds no position in any of the companies mentioned.