If you want to purchase a cannabis company, you need to know a lot of things beforehand. Not every company will be a good acquisition.
And like with every other industry or niche, there are various small intricacies that you need to learn before buying the right marijuana businesses for sale.
Marijuana Businesses for Sale: The basics
Cannabis organizations are agricultural companies.
The same set of rules that would apply to potato farmers apply to them as well. So, it is much better if you have some experience in the field.
The most important thing to note is that the cannabis business is relatively young, and starting a company this early can prove to be very lucrative for savvy entrepreneurs.
Here are some of the main things you need to pay attention to when buying a cannabis business.
State or country regulation and specifics
Needless to say, you should first consider the specific laws in a state. It is much easier to grow cannabis in Oregon, Colorado, and California than in some other places.
Keep in mind that the wave of cannabis legalization in America has been a slow burn (no pun intended). Certain states have allowed marijuana and CBD products a long time ago, while others are more reluctant to do so.
Even in 2020, there are a few US states that prohibit both medical and recreational marijuana.
Here is our list of top 5 states that are ideal for starting a cannabis business:
Oregon is definitely the most progressive American state when it comes to cannabis. They were the first to decriminalize possession and legalize recreational marijuana.
Recently, the governing bodies have enacted a law that would completely decriminalize all drugs, which would allow the state to focus on rehabilitation instead of prevention.
Furthermore, the 17% marijuana state tax makes it one of America’s best places to run a cannabis business. Oregon is also becoming famous among foreign customers due to the fact that this region has some of the best conditions in the world for growing quality cannabis.
If you buy an agricultural property in this state, this will give you a springboard for penetrating international markets.
The state of Colorado is known as one of the more liberal places in America. They are very progressive in terms of the laws, and there was very little push back when they legalized cannabis.
Nowadays, a big chunk of American cannabis companies is located in places like Denver, Colorado Springs, Aurora, Boulder, etc. Besides favorable laws, it is a great place logistically connecting you with the whole of America.
The only downside is that their cannabis taxes have increased in the last few years.
Despite popular opinion, California can be tricky if you wish to buy or set up a cannabis company. The state taxes are rather high, there is a lot of congestion and traffic in urban areas, but this also has its benefits.
California is an enormous state with many potential customers who don’t mind paying for the good stuff. It is especially great if you wish to diversify your product line. The state has a long-lasting cannabis culture, and if you can find a good plot just outside of a major urban area, you can make a lot of money.
So, if a company has properties within the city limits, it can drive the overall purchasing price way up. Lastly, California has an amazing climate for this plant.
Nevada is another state where you can find awesome marijuana businesses for sale. One of the tricky things about this state is that the government has a competitive scoring process that would decide who gets the license.
If a company you wish to buy already has all the documents, this would save you a lot of time and put you in an advantageous position in the local market.
While Nevada’s cannabis sales numbers are not as impressive as those of California, Oregon, or Colorado, the government has made major strides in streamlining the whole process and helping the producers.
The east coast has not been kind to cannabis businesses, as was the west coast. While the sunny states like Arizona, Nevada, and California have done their best to legalize cannabis, most eastern states have trailed behind. But this also presents certain opportunities.
If you’re looking for marijuana businesses for sale, there aren’t many places better on the east coast than Massachusetts. Although it is really easy to apply for a cannabis license (it takes up to 90 days to get the permits), buying a cannabis company today would give you a quick, strategic entry into the market.
Massachusetts has one of the largest cities in the East (Boston) and one of the bigger campuses (Cambridge). So, entering the market as soon as possible would definitely help. The state cannabis taxes are low right now, and you should take this opportunity to make real money.
Now that you have the general idea of where you want to buy a cannabis business, it is time to check some company-specific factors.
If an entrepreneur has decided to sell his or her business, there is probably good reasoning behind this. Sometimes, people are in a pinch for money.
They might want to sell a cannabis project because they have better opportunities. Perhaps the conditions and tax rates have changed, driving them out of business.
No matter what, you need to be cautious when buying a cannabis business as it is very rare for an entrepreneur to sell a blooming organization, especially if we consider that the cannabis industry has been on the rise for a while now.
Here are five of the things you need to consider when deciding which business to buy!
Type of a company
When we say “cannabis business,” it can entail a lot of different things.
In most cases, this would refer to a plantation or a dispensary, but it can also stand for a facility. Depending on your particular needs, you would need one thing or another.
When making a decision, ask them if they have some other assets you should know about.
Licenses and permits
Getting a permit or a license can be a real pain, depending on the state. As places, there are states where you can get a license in 90 days, while there are those where it is really hard to get the documents.
If it’s really hard to get a permit in this particular state, buying a company with proper documentation would provide a great advantage.
But, if a company already has all the permits, and they wish to be paid extra for that, in a state where permits are not an issue, you should reconsider the purchase.
In order to make an educated decision, learn more about the local permits and licensing so that you don’t get ripped off.
The quality of soil
If you’re buying an agricultural property, we suggest that you hire a professional who would check the quality of soil beforehand.
This is something that is a must for any agricultural property but is especially important for cannabis.
Even if a state or a region is well known for its climate and quality of soil, you should still perform due diligence.
Whether we’re talking about a company’s commercial properties or the location of their dispensaries, you should check their value.
Assessing a neighborhood can be really tough, especially if you’re not from that area. Besides the fact that a well-positioned dispensary could yield more money, it might affect your transportation costs.
The same goes for commercial properties. Make sure that the property prices are not overblown, and how it compares to other nearby cities.
Goodwill is one of the toughest things to measure in the economy. It refers to the company’s intangible assets such as patents, client base, brand recognition, and everything else that is not on a balance sheet.
Buying a cannabis company with high goodwill will ease your market penetration and would allow you to make money sooner than later. But, given that it’s really tricky to measure, we suggest that you hire a financial advisor who has experience with the cannabis industry.
Needless to say, you should also account for negative goodwill (company’s bad reputation, or any issues that they’ve caused during their work).
Wrapping it up
With these tips, you will be able to find great marijuana businesses for sale.
The industry is booming right now, and every day that you waste thinking about, it is a loss of potential profits.
If you decide to buy a new marijuana business and need marketing services, make sure to contact us today!