Marijuana Business Magazine May-June 2020

into the cannabis industry because it’s considered sexy or because everyone else is doing it, said C. Adam Foster, founder at the Denver-based law firm Foster & Jones. “Obviously, part of it is looking at financials, but I’d say the starting point is to look at state law and any restrictions put on change of ownership or investment by public companies. And then also look at local law, because sometimes there can be local restrictions on changes of ownership in addition to the state law,” Foster said. Buyers can talk with state licensing officials and look at licensing authorities’ websites to get a handle on how to acquire a cannabis licensee’s operations. A lawyer also can help firms make sense of state and local regulatory environments. “It is a buyer’s market, especially versus a year or two ago, but that doesn’t mean that sellers need to be totally desperate or do some kind of a fire sale. It does mean that sellers need to really be able to tell a story about their company,” Foster said. Acquirers should be looking for companies that can tell a story about having really solid financial and corporate records and governing documents “so that a buyer can see there’s been sound financial management, the finances of the company are in good shape and the business has been managed in a professional way that respects corporate formalities,” he said. Sellers also should be able to highlight whether they own their real estate or have locked in favorable lease terms. And if part of the deal is keeping the management team, sellers should be able to detail their team’s expertise and how they’ll work with the buyer’s staff. “It’s caused some short-term pain within the industry, but this type of rigor and focus on the fundamentals may be positive for the industry in the long run,” Foster said. “It’s going to tend to reward good operators who have been running their businesses carefully.” C. Adam Foster www.cannsystems.com - info@cannsystems.com - (303) 300-1100 Energy Efficient Heat Pump Dehydration Systems Energy Efficient Precision Controls Superior Results Safe & Secure Capacity of up to 17,600 lbs of wet product