Business
Herbl collapse signals wider fallout in California marijuana industry
California-based marijuana distribution giant Herbl is going to the courts in a bid to recover some of the roughly $10 million it claims retailers owe the company, which fell into receivership in June.
At the same time, according to court and investor documents, at least one of Herbl’s former brand partners – Sunset Connect – is suing to recover a six-figure debt the San Francisco maker of pre-rolls claims that Herbl owes and refuses to pay, records show.
The unprecedented struggle over what’s left of the once-prominent distribution company is a wave in a broader ripple effect that observers fear could sink more California cannabis businesses amid a cash squeeze plaguing the state’s marijuana industry.
In terms of what’s left of Santa Ana-based Herbl, retailers, brands, investors and creditors as well as state and federal tax collectors appear to be in a race to be the first to collect money from a rapidly vanishing pot.
Herbl’s unprecedented collapse is also a test case for the U.S. marijuana industry as a whole.
Federal prohibition means cannabis companies can’t use typical avenues for businesses in such financial straits, including bankruptcy proceedings that would allow for debt to be restructured and certain assets protected.
In Herbl’s case, “it is understood from the terms of the receivership that investors and claimants will be prioritized over the brands seeking payment,” said Alexis Lazzeri, a Los Angeles-based attorney at Manzuri Law.
In addition to Pasadena-based East West Bank, Herbl’s main lender, Herbl’s investors include New York City-based Roystone Capital Management, sources close to the situation told MJBizDaily.
Roystone did not respond to a request for comment.
It’s unclear how much Herbl may owe its erstwhile brand partners, but observers said those cannabis companies may be least likely to recover money owed.
Herbl has yet to make a public statement about its collapse.
Nor did it directly inform its partners, some brands told MJBizDaily.
‘Destined to happen’
The Herbl situation is also amplifying the voices of critics who argue that California’s mandatory distribution model as well as current state tax structure are unworkable.
That’s particularly true in a bear market in which creditors are seeking either unrealistically quick returns on their investments or calling back their capital from cash-poor businesses.
“I think this was destined to happen, the way the California market is set up,” said Griffen Thorne, a Los Angeles-based attorney and corporate law specialist at Harris Bricken, an international firm with a specialized cannabis practice.
“I don’t think it’s an Herbl thing. It’s just a symptom of the way the industry was set up and the way the market is going right now.”
“There’s going to be a lot of fighting over unsecured debt,” he added.
“There’s a lot of people out there vying for money, and it’s going to be hard for those folks to get paid.
“This is going to be the first of many failures and flameouts we’re going to see as a result of the creditor crunch.
“It’s just not going to be clean, and, unfortunately, this is where we’re at with the industry.
Anatomy of a struggle
Court records in Los Angeles and Orange counties show Herbl is suing at least 10 retailers and delivery services for unpaid debts.
Past-due amounts range from $22,000, owed by Southern California-based General Verde Organics, to more than $123,000 owed by Urban Buds, a Los Angeles-area delivery service, according to court records.
Urban Bud did not respond to MJBizDaily requests for comment. General Verde could not be reached for comment.
Herbl’s collection efforts began earlier this spring, before the company’s struggles became publicly known, though attorneys for Herbl filed several complaints seeking past-due bills in June, court records show.
How much Herbl, in turn, owes the brands whose products it distributed is not known.
Also unknown is Herbl’s potential overdue tax liability to the state and the IRS.
Herbl fell into receivership in early June after the company’s main lender, East West Bank, called in a key loan, as MJBizDaily first reported.
The bank’s aggressive collection efforts set off a chain reaction that broke the already weakened company.
According to an undated investor update from Herbl founder and CEO Mike Beaudry obtained by MJBizDaily, East West canceled Herbl’s line of credit in March.
Herbl was already “in desperate need of new capital” after an attempted raise the previous August resulting in no new investors “despite (the company’s) willingness to extend extremely favorable terms,” Beaudry told investors in the update.
At the same time that East West canceled Herbl’s line of credit, the bank demanded the company start repaying a $5 million loan “in increments of $250k per week or face immediate foreclosure proceedings,” Beaudry wrote.
‘Uniquely vicious’
That “bloodthirst” was “uniquely vicious, but not surprising given that the distribution model essentially makes distributors act as banks to the cannabis industry, fronting money for retailers,” Manzuri Law’s Lazzeri said.
“It might also be an indication of a loss in trust in the state of the cannabis industry and a lack of incentive to continue to hold it up,” she added.
Herbl made the bank payments, but the resulting cash crunch – coupled with spiraling overdue accounts-receivable from retailers that ballooned to “nearly $10 (million), of which $7M+ is significantly in arrears” – “forced us to begin missing payments with our brand partners,” Beaudry wrote.
“That, in turn, caused our brand partners to begin exiting our platform.”
The resulting downward spiral came to a head in June. Brands publicly announced they were leaving Herbl before Herbl employees posted farewells on social media.
“We are working with East West Bank on next steps, which we anticipate will involve a process of liquidating HERBL’s assets,” Beaudry noted in the investor update.
Beaudry did not respond to an MJBizDaily request for comment.
David Hafner, a spokesperson for California’s Department of Cannabis Control, told MJBizDaily that regulators are ‘informed that Herbl is in receivership and is communicating with the licensee and receiver to address issues related to the licenses.”
“As with any licensed business in California, cannabis licensees who have unpaid invoices can avail themselves of any applicable legal processes to recover funds,” Hafner continued.
“We encourage our licensees to seek out the appropriate, legal solutions to resolve their matters.”
Herbl also does business in Nevada, where its operations are so far unaffected, Beaudry wrote in the investor update.
Brands left out
One of those brands, Sunset Connect, did just that.
In a June 20 lawsuit filed in San Francisco Superior Court, Sunset Connect is seeking compensation for more than $130,000 worth of pre-rolls that Herbl sold to retailers.
That product was sold and Herbl collected payment, but then Herbl informed the brand that “they would not be paying,” the lawsuit alleges.
Ali Jamalian, Sunset Connect’s founder and owner, told MJBizDaily via text that Herbl “did a great job as a full-service distributor.”
However, the subsequent “lack of transparency and willingness to make so many brands a casualty of said lack of transparency is not excusable,” he added.
“I for one never even received any communications announcing their receivership or inability to pay, not sure if other brands did but I doubt it.”
Source: https://mjbizdaily.com/herbl-collapse-signals-wider-fallout-in-california-marijuana-industry/
Business
EU Pressure Builds on Google as Regulators Face Calls for Massive Fine Over Search Practices
A growing coalition of European industry groups is intensifying pressure on regulators to take decisive action against Google over allegations of unfair search practices that could reshape competition rules across the region’s digital economy.
Investigation Under Digital Markets Act Gains Momentum
The case is being examined by the European Commission under the European Union’s landmark Digital Markets Act (DMA), introduced to curb the dominance of major technology platforms and ensure fair competition.
Launched in March 2024, the investigation focuses on whether Google has been prioritising its own services in search results, potentially disadvantaging rival businesses that rely on online visibility to reach customers.
Industry Groups Demand Swift Action
Several prominent European organizations have jointly urged regulators to conclude the probe without further delay. They argue that prolonged investigations allow alleged anti-competitive practices to continue, putting European companies—especially startups—at a disadvantage.
Signatories include the European Publishers Council, the European Magazine Media Association, the European Tech Alliance, and EU Travel Tech.
In a joint statement, these groups warned that delays in enforcement are affecting innovation, profitability, and growth prospects for regional businesses competing in digital markets.
Google Denies Allegations
Google has rejected claims of bias, stating that its search algorithms are designed to deliver the most relevant and useful results to users. The company has also proposed adjustments to address regulatory concerns.
However, critics argue that these changes are insufficient and fail to address the core issue of market dominance.
Potential Billion-Euro Penalties
If found in violation of the DMA, Google could face significant financial penalties. Under EU rules, fines can reach a substantial percentage of a company’s global turnover, potentially amounting to billions of euros.
Regulators may also impose corrective measures requiring changes to business practices, which could have long-term implications for how digital platforms operate in Europe.
Wider Implications for Big Tech
The case highlights ongoing tensions between European regulators and major U.S. technology firms. In recent years, the EU has taken a more aggressive stance in enforcing competition laws, aiming to create a level playing field for local businesses.
A final ruling against Google could set a major precedent, influencing future enforcement actions and shaping the regulatory landscape for global tech companies operating within Europe.
As scrutiny intensifies, the outcome of the investigation is expected to play a critical role in defining the future of digital competition across the European Union.
AI & Technology
Amazon Faces Potential Criminal Trial in Italy Over €1.2 Billion Tax Evasion Allegations
Milan: U.S. tech giant Amazon is facing the prospect of a major legal showdown in Italy, after prosecutors in Milan formally requested a court to move forward with criminal proceedings over alleged tax evasion totaling approximately ₹12,500 crore (€1.2 billion).
The case targets Amazon’s European division along with four senior executives, marking one of the most significant tax-related investigations involving a global e-commerce platform in Europe.
Trial Push Despite Multi-Million Euro Settlement
The move comes even after Amazon reached a financial settlement with Italian tax authorities in December, agreeing to pay around ₹5,500 crore (€527 million), including interest, to resolve part of the dispute.
Typically, such settlements lead to the closure of criminal investigations. However, Milan prosecutors have opted to proceed, signaling a tougher stance on alleged corporate tax violations.
A preliminary hearing is expected in the coming months, where a judge will decide whether to formally indict the company and its executives or dismiss the case.
Allegations of VAT Evasion Through Marketplace Sellers
At the center of the investigation are claims that Amazon’s platform enabled non-European Union sellers to avoid paying value-added tax (VAT) on goods sold to Italian consumers between 2019 and 2021.
Prosecutors allege that the company’s marketplace structure allowed thousands of foreign vendors—many reportedly based in China—to operate without fully disclosing their identities or tax obligations. This, authorities argue, led to substantial VAT losses for the Italian government.
Under Italian law, online platforms facilitating sales can be held partially liable if third-party sellers fail to comply with tax requirements, a key point in the prosecution’s case.
Italian Government Named as Affected Party
In their filing, prosecutors identified Italy’s Economy Ministry as the injured party, citing significant financial damage resulting from the alleged tax evasion.
Legal experts say the outcome of the case could have wide-ranging implications across the European Union, where VAT systems are harmonized and similar compliance rules apply to digital marketplaces.
Multiple Investigations Add to Pressure
The VAT probe is just one of several legal challenges facing Amazon in Italy. The European Public Prosecutor’s Office is reportedly examining additional tax-related issues covering more recent years.
Meanwhile, Milan authorities are pursuing separate investigations into alleged customs fraud linked to imports from China and whether Amazon maintained an undeclared “permanent establishment” in Italy—potentially exposing it to higher tax liabilities.
In a separate regulatory action, Italy’s data protection authority recently ordered an Amazon unit to stop using personal data from over 1,800 employees at a warehouse near Rome.
Amazon Denies Allegations
Amazon has consistently denied wrongdoing and indicated it will strongly contest the allegations in court if the case proceeds. The company has also warned that prolonged legal uncertainty could impact investor confidence and Italy’s appeal as a destination for international business.
Broader Impact on Europe’s Digital Economy
If the case moves to trial, it could become a landmark moment for the regulation of global e-commerce platforms in Europe. Governments across the region are increasingly scrutinizing how digital marketplaces handle tax compliance, especially in cross-border transactions.
With online retail continuing to expand, regulators are under mounting pressure to ensure that multinational platforms and third-party sellers adhere to the same tax rules as traditional businesses.
Aviation
IndiGo Crisis Exposes Risks of Monopoly: What If Telecom or E-commerce Collapses Next?
Airports across India witnessed scenes of distress and confusion as thousands of passengers were stranded due to IndiGo’s massive flight disruptions. Families with medical emergencies, funerals, and personal crises were left helpless as the airline cancelled hundreds of flights without adequate communication or support.
Passengers described desperate situations — a mother pleading for sanitary pads for her daughter, a woman unable to transport her husband’s coffin, and others stranded while trying to reach family funerals or hospitals. “It was like a lockdown at the airport,” one passenger said, describing the panic that unfolded as IndiGo’s mismanagement crippled operations nationwide.
Root Cause: IndiGo’s Market Monopoly
The turmoil, industry experts argue, stems from IndiGo’s monopolistic control over India’s domestic aviation market. The airline operates nearly 2,100 flights daily and holds around 60% market share — meaning every second plane flying within India belongs to IndiGo.
This dominance has given the company unparalleled influence. When IndiGo falters, the entire aviation system suffers. Passengers are left with few alternatives, as other airlines lack capacity to absorb stranded travellers. The result: skyrocketing ticket prices, chaos at terminals, and total dependence on a single private operator.
Aviation pioneer Captain G.R. Gopinath, founder of Air Deccan, criticised the government’s inaction, noting that on some routes, IndiGo’s economy fares surged to ₹1 lakh. He compared the situation to a hostage crisis, writing that the airline “held the system ransom” and forced regulators to defer new safety rules meant to protect pilots and passengers.
Government Intervention and Regulatory Weakness
The crisis erupted after IndiGo failed to comply with the Flight Duty Time Limitations (FDTL) — rules introduced by the DGCA in January 2024 requiring adequate rest for pilots. Despite having nearly two years to adapt, IndiGo blamed the rule for operational disruptions, citing a shortage of pilots.
Under mounting public pressure, the government stepped in, temporarily relaxing FDTL norms and capping airfare hikes. Officials claimed the move was to protect passengers, but analysts say it exposed the state’s vulnerability to corporate monopolies. “The government had no option but to yield,” said one aviation policy expert, pointing out that ignoring safety regulations for short-term relief could have long-term consequences.
The crisis also rekindled memories of the June 2025 Air India crash near London, which claimed over 240 lives. Experts warn that compromising pilot rest and safety standards to maintain flight schedules could risk another tragedy.
If Telecom Giants Fail: A National Paralysis
The article raises a troubling question — what if a similar crisis struck the telecom sector, where Jio and Airtel together control nearly 80% of subscribers and serve over 780 million users?
If both networks failed simultaneously, the repercussions would be catastrophic. Internet shutdowns would halt UPI transactions, online banking, OTP verifications, video calls, OTT streaming, and emergency communications. Critical services such as airports, hospitals, stock exchanges, and small businesses — many of which rely on WhatsApp and digital payments — would come to a standstill.
In essence, a telecom breakdown could paralyse India’s digital economy, exposing the nation’s dependence on a duopoly.
E-commerce Monopoly: Another Fragile Ecosystem
The same risk looms over the e-commerce sector, where Amazon and Flipkart dominate nearly 80% of the market. A disruption similar to IndiGo’s could cripple daily life — halting delivery of groceries, medicines, and essential goods, freezing refunds and customer support, and leaving small sellers without platforms to trade.
Local retailers, freed from competition, might exploit shortages by inflating prices. Such a scenario underscores the perils of market centralisation in sectors critical to everyday living.
A Wake-Up Call for Regulators
The IndiGo crisis, analysts say, is a warning shot for policymakers and regulators. A single company’s operational failure exposed systemic weaknesses in India’s infrastructure and consumer protection mechanisms.
As the aviation regulator DGCA investigates and IndiGo works to restore normalcy, the broader lesson remains clear: unchecked monopoly power in any essential service — whether air travel, telecom, or e-commerce — poses a direct threat to economic stability and citizen welfare.
Without stronger competition laws, redundancy frameworks, and regulatory oversight, India risks repeating this crisis across multiple sectors — each time with millions of citizens paying the price.
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