What You Need to Know When Buying a Cannabis Business, Part 1: Overview
Cannabis businesses are unlike typical businesses in large part due to the significant tension between federal and state laws and regulations. This tension creates some uncertainty for every licensed cannabis business and every other business and individual involved in the marketplace: owners, financiers, employees, ancillary service providers, and even accountants and attorneys.
In this forthcoming series of blog posts, I will provide guidance to attorneys and first-time cannabis company buyers who need to understand how cannabis M&A work differs from normal M&As and even M&As in other highly regulated industries.
How Soon Can We Close?
The state and federal interplay uncertainty and the highly regulated nature of the cannabis marketplace create an often slow-moving environment, which is something first time prospective buyers and their attorneys may not be expecting. Depending on the state, a typical acquisition could range from as few as three months to as many as twelve months after the buyer and seller are prepared to close the transaction.
A closing could occur on the shorter end of the time range where the buyer already owns a license in the target market and is merely expanding its market presence by acquiring another license or licensed business.