| 1031 Exchange | 1031 | A U.S. tax provision that may allow deferral of certain capital gains by exchanging business/investment real property for other qualifying real property through strict timing rules and a qualified intermediary (personal property no longer qualifies). |
| 280E (Cannabis Tax) | 280E | Federal rule that generally disallows deductions/credits for a business trafficking in Schedule I/II controlled substances where prohibited by federal or state law (COGS treatment is separate and fact-specific). |
| Acceptable Hemp THC Level | | Under USDA hemp rules, hemp is “acceptable” for compliance when the lab’s reported total THC, after applying the lab’s measurement of uncertainty, includes 0.3% or less (dry weight). |
| Accrual Basis Accounting | | Accounting method recognizing revenue when earned and expenses when incurred, regardless of cash timing; often preferred for inventory-based businesses. |
| Acquisition | | A buyer obtaining control of a business (or its assets), typically via an asset purchase or an equity purchase. |
| Add-backs | | Adjustments adding back certain expenses to reflect normalized earning power (owner-specific, discretionary, or non-recurring items), subject to verification. |
| Add-On Acquisition | | A bolt-on purchase added to an existing platform company to gain scale, capabilities, or geographic reach. |
| Adjusted EBITDA | | EBITDA normalized to remove one-time, non-operating, or unusual items; in owner-operated deals it may also normalize owner/manager compensation to market replacement levels. |
| Adjusted Book Value | | Net asset value where balance-sheet assets and liabilities are adjusted toward economic/market reality (including relevant contingencies) to estimate equity value. |
| Adjusted Book Value Method | | Asset-based valuation method that restates assets/liabilities to estimated fair values to derive an indicated equity value. |
| Adult-Use Cannabis | AU | State-regulated non-medical cannabis sold to adults (typically 21+), with licensing/taxes/rules distinct from medical programs. |
| Advertising Restrictions | | Regulatory limits on marketing (audience age thresholds, placement, claims, packaging imagery) that can materially affect customer acquisition. |
| Agent / Badge Holder | | A person authorized to work on behalf of a licensee (employee/contractor/transport), often requiring registration/badging and background clearance. |
| Alarm System | | Intrusion detection (often monitored) required by many cannabis rules and commonly reviewed during licensing inspections. |
| Anti-Dilution Provision | | Preferred-equity term adjusting conversion economics if a later round is priced lower, mitigating dilution for protected investors (mechanics vary). |
| Appraisal | | A professional opinion of value prepared for a stated purpose using recognized methods and assumptions (often lender-required for CRE). |
| Asset Deal | | Transaction where the buyer purchases selected assets (and may assume selected liabilities) without buying the seller’s ownership entity. |
| Assignment (Lease) | | Transfer of a tenant’s lease rights/obligations to a new tenant (often requiring landlord consent); common in cannabis business sales tied to premises. |
| Average Unit Volume | AUV | Franchise metric describing average sales per unit/store over a defined set of locations/time. |
| Background Check | | Regulator-required screening for owners, control persons, and sometimes key employees; failures can block licensing or trigger enforcement. |
| Badging | | Issuance and management of required facility worker IDs, often tied to access control, visitor logs, and audit trails. |
| Balloon Payment | | A large final loan payment due at maturity because scheduled payments did not fully amortize principal. |
| Batch | | A defined quantity produced under uniform conditions for tracking/testing; “batch” definitions vary by state—align COAs and inventory to the state definition. |
| Basis Points | bps | Interest-rate unit where 100 bps = 1.00% and 1 bp = 0.01%. |
| Biomass | | Bulk plant material (often trim and/or flower) intended for extraction; value depends on potency, moisture, contaminants, and provenance. |
| Book Value | | Accounting carrying value: for a company, assets minus liabilities; for an asset, cost minus accumulated depreciation/amortization (often differs from market value). |
| Broker’s Opinion of Value | BOV | A broker-prepared value estimate based on market knowledge and comps; not a formal appraisal. |
| Buffer Zone | | Required distance between cannabis premises and sensitive uses (schools/parks, etc.); measurement rules differ by jurisdiction. |
| Buildout | | Construction/renovation scope required to make a site code-compliant and license-ready (power, HVACD, security, plumbing, fire). |
| Build-to-Suit | BTS | Development built to a tenant’s requirements (often power, HVACD, security, hazardous rooms); frequently conditioned on zoning/local approvals. |
| Burn Rate | | Net cash spend rate (often monthly) used to estimate runway—especially relevant for vertically integrated or growth-stage operators. |
| Business Broker | | Intermediary who markets privately held businesses for sale and guides parties through pricing, negotiation, diligence coordination, and closing. |
| Buyer Representation Agreement | | Contract hiring a broker/agent to represent a buyer; defines duties, term, and compensation handling. |
| CAM (Common Area Maintenance) | CAM | Shared-area operating costs allocated to tenants under lease terms; cannabis retail/industrial sites often have high CAM variability. |
| Cannabinoid | | Compounds produced by Cannabis plants (e.g., THC, CBD); legality often depends on source (hemp vs marijuana), concentration, and product type. |
| Cannabis (Federal Scheduling Status) | | A DOJ/DEA proposed rule to move marijuana to Schedule III has been issued; until a final rule becomes effective, marijuana remains Schedule I under federal law. |
| Cannabis Business License | | State/local authorization to conduct defined cannabis activities (cultivation, manufacturing, retail, distribution, etc.); many states require local approval first. |
| Cannabis Lease Rider | | Lease addendum addressing cannabis-specific issues (license contingency, compliance duties, inspections, odor, hazardous materials, indemnities). |
| Cannabis-Related Banking Compliance | BSA/AML | Bank Secrecy Act / Anti–Money Laundering frameworks driving enhanced diligence and monitoring for cannabis-related accounts. |
| Cap Rate (Capitalization Rate) | | NOI ÷ value (or NOI ÷ price), used to compare income properties; ensure NOI is stabilized and expenses are correctly classified. |
| Cap Table | | Ownership record of equity, options, warrants, and convertibles—important for “change of control” thresholds and license disclosure obligations. |
| Capital Stack | | Financing layers in priority order (senior debt, mezzanine, preferred equity, common equity) with different risk/return profiles. |
| Capitalization (Accounting) | | Recording a cost as a long-term asset rather than expensing it immediately (relevant to buildouts/equipment). |
| Capital Expenditures | CapEx | Major spending for long-lived assets (HVACD, electrical upgrades, extraction equipment) that may not be captured in NOI/EBITDA unless specified. |
| Cash Basis Accounting | | Accounting method recording income when cash is received and expenses when cash is paid; often used by small operators but may obscure true performance. |
| Cash Flow | | Generic term that can mean operating cash flow, free cash flow, or proxy metrics (SDE/EBITDA/NOI). Always specify the definition being used. |
| Cash Management Plan | | Policies/vendors for handling cash (vaulting, transport, counting, deposits), critical for cash-heavy cannabis operators. |
| Certificate of Analysis | COA | Lab report documenting required test results (potency and contaminants); COA must match the correct batch/lot identifiers. |
| Chain of Custody | | Documentation of who controlled samples/inventory from collection through testing and release; important for defensible compliance. |
| Change of Control | | Ownership/control change beyond legal/contract thresholds, often requiring regulator notice/approval and landlord/lender consent. |
| Child-Resistant Packaging | CRP | Packaging designed to be difficult for children to open; often required for cannabis and many hemp-derived ingestibles. |
| Churn | | Customer loss rate over a defined period; material for subscription/consumer brands and for projecting retention-based revenue. |
| C1D1 (Hazardous Location) | C1D1 | Electrical/fire classification for areas where flammable gases/vapors may be present under normal operations—often relevant to hydrocarbon extraction rooms. |
| C1D2 (Hazardous Location) | C1D2 | Hazard classification where flammable gases/vapors are not normally present but may occur under abnormal conditions; still drives special electrical/ventilation design. |
| Closing | | Final transaction step where documents are executed, funds transfer, and ownership/lease rights are conveyed. |
| Closing Costs | | Fees/expenses to complete a deal (legal, title, escrow, lender fees, recordings), varying by deal type. |
| Co-tenancy | | Retail lease term where obligations/remedies can change if key tenants leave or occupancy drops, as defined in the lease. |
| Collateral | | Assets pledged to secure a loan (real estate, equipment, receivables). Cannabis lenders may apply higher haircuts due to regulatory/transfer constraints. |
| Common Size Statements | | Financial statements expressed as percentages (P&L lines as % of revenue) for comparability across time and peers. |
| Common Use Permit | CUP | See Conditional Use Permit (CUP). |
| Compliance Audit | | Review of operations/records against regulatory requirements (inventory, surveillance, training, waste, labeling, transport). |
| Concentrate | | Extracted cannabinoid product (oil/rosin/resin). Compliance hinges on processing method, residual solvent limits (if applicable), and labeling rules. |
| Conditional License | | Provisional/conditional permission to operate or proceed while completing requirements; scope and duration vary by state. |
| Conditional Use Permit | CUP | Local land-use permit often required for cannabis uses even when zoning allows them; typically imposes operational conditions (hours, security, odor, signage). |
| Confidential Information Memorandum | CIM | Buyer package describing a business (often more formal for larger deals); typically shared after NDA. |
| Confidentiality Agreement | NDA | Contract restricting use/disclosure of sensitive deal information (financials, SOPs, customer lists, location identity). |
| Contingency | | Deal condition that must be satisfied or waived (licensing approval, landlord consent, financing, inspections). |
| Controlled Substances Act | CSA | Federal law scheduling controlled substances; marijuana scheduling drives many banking/tax/interstate commerce constraints. |
| Cost of Goods Sold | COGS | Direct costs attributable to goods sold; in cannabis, COGS matters heavily due to 280E’s limits on other deductions. |
| Cost of Capital | | Required return demanded by debt/equity providers for risk taken; influences discount rates and valuations. |
| Credit Line | | Revolving facility allowing draw/repay/redraw up to a limit; often used to manage working-capital swings. |
| Cultivation | | Growing cannabis/hemp; value depends on canopy entitlement, facility performance (HVACD/power), genetics, yields, and compliance history. |
| Cultivation Canopy | | Regulated or licensed measurement (often flowering canopy) that limits production; not the same as total building square footage. |
| Cure Room | | Controlled environment after drying to stabilize moisture and quality and reduce mold risk. |
| Customer Due Diligence | CDD | Enhanced bank diligence for cannabis/hemp operators (licensing verification, beneficial owners, site visits, monitoring) under BSA expectations. |
| Deal Structure | | The overall transaction design—what’s bought, payment timing (cash/note/earnout), contingencies, and risk allocation. |
| Debt Service Coverage Ratio | DSCR | Cash flow (or NOI) divided by total debt service; lender formulas vary—confirm inputs (reserves, management fees, taxes). |
| Debt Yield | | NOI ÷ loan amount; lender metric showing income support for debt independent of interest rate. |
| Delta-8 THC | | A cannabinoid often produced via chemical conversion from hemp-derived CBD; legality and permitted product types vary widely by state and are actively evolving. |
| Delta-9 THC | Δ9-THC | Primary psychoactive cannabinoid referenced in federal hemp definitions and many state potency frameworks. |
| Dehumidification Load | | Moisture removal capacity needed to maintain grow-room conditions and reduce microbial risk; often a key facility constraint. |
| Depreciation | | Non-cash accounting expense allocating the cost of tangible assets over useful life; often added back in EBITDA-based valuation. |
| Discounted Cash Flow | DCF | Valuation method projecting future cash flows and discounting them to present value using a discount rate. |
| Discount for Lack of Marketability | DLOM | Valuation adjustment reflecting illiquidity and difficulty selling a private interest quickly at a known price. |
| Discount Rate | | Required return used to discount future cash flows; typically higher for riskier businesses/assets. |
| Distribution (Cannabis) | | Licensed function that may include warehousing, transport, and product movement controls; scope differs by state (sometimes also handles tax stamping/testing routing). |
| Diversion | | Product leaving the regulated supply chain or being sold outside permitted channels; a major enforcement and license risk. |
| Distillate | | Highly refined cannabinoid oil; compliance hinges on source material, testing, and labeling/claims rules. |
| Due Diligence | | Verification of financials, compliance history, licenses, inventory integrity, contracts, leases, zoning, and SOPs; in cannabis, compliance diligence is often as important as financial diligence. |
| Earn-Out | | Deferred payment tied to future performance; in regulated industries it requires careful definition and controls to avoid disputes and compliance conflicts. |
| EBITDA | EBITDA | Earnings before interest, taxes, depreciation, and amortization; common profitability proxy for valuation and lending. |
| Effective Rent | | Rent economics after concessions (free rent, TI) spread over the lease term; useful for comparing lease offers apples-to-apples. |
| Environmental Site Assessment | ESA | Environmental diligence (often Phase I) to identify contamination risks and whether further testing is warranted. |
| Equity | | Ownership claim after liabilities; includes governance rights and economics (distributions, liquidation). |
| Escalation Clause | | Lease term increasing rent or reimbursable expenses over time (fixed steps, CPI, or other formula). |
| Escrow | | Neutral third party holds funds/documents until closing conditions are met (e.g., earnest money, holdbacks). |
| Estoppel Certificate | | Tenant/landlord statement confirming lease facts (rent, term, defaults, options), often required in CRE sale/refinance. |
| Farm Bill Hemp Definition | | Federal definition of “hemp” as Cannabis sativa L. and derivatives with ≤0.3% delta-9 THC (dry weight), with additional statutory language relevant to total THC. |
| Fair Market Value | FMV | Value standard describing a hypothetical willing buyer/seller transaction in an open market, neither compelled, both reasonably informed. |
| Fire Marshal Signoff | | Fire/occupancy approvals (especially critical for extraction, gas storage, and hazardous rooms) that can gate licensing. |
| Free Rent | | Lease concession reducing or waiving rent for a period; commonly used to offset long permitting/buildout timelines for cannabis tenants. |
| Generally Accepted Accounting Principles | GAAP | Financial reporting standards; GAAP results can differ from tax-basis statements and management-recast statements. |
| Good Manufacturing Practices | GMP / cGMP | Documented manufacturing and quality systems (SOPs, batch records, deviations, recalls) increasingly expected for cannabis/hemp manufacturing scale. |
| Goodwill | | Intangible value tied to brand, customer relationships, and reputation that may justify value beyond tangible assets. |
| Green Zone | | A locally designated area where cannabis uses are permitted or prioritized (often via zoning overlays, maps, or specific plan areas). Definitions and boundaries are city/county-specific. |
| Gross Lease | | Lease where rent includes some or most operating expenses, depending on what the lease defines as included vs passed through. |
| Hard Costs | | Direct physical construction costs (labor/materials/equipment). Cannabis hard costs can be unusually high due to power, HVACD, security, and code demands. |
| Hazardous Materials Storage | | Storage/permitting for solvents/gases (butane/propane/ethanol/CO₂) requiring compliance with fire code, ventilation, and detection systems. |
| Hemp Plan | | USDA-approved State/Tribal plan (or USDA plan) governing hemp production, including sampling/testing, reporting, and disposal rules. |
| Hemp Processor Registration | | State-level registration/license to process hemp into extracts/products; requirements vary widely and may intersect with food/drug/cosmetic rules. |
| Hemp Producer License | | State/Tribal/USDA authorization to grow hemp with land reporting and compliance sampling/testing requirements. |
| Holdback | | Portion of price withheld (often in escrow) to cover post-close adjustments or defined risks (inventory, taxes, compliance liabilities). |
| HVACD | HVACD | Heating/ventilation/air conditioning plus dehumidification and filtration—critical for cultivation performance and contamination prevention. |
| Hydrocarbon Extraction | | Extraction using butane/propane blends; often triggers C1D1/C1D2 design, ventilation, gas detection, and fire code approvals. |
| Indemnification | | Contract obligation to reimburse defined losses (e.g., undisclosed compliance violations, tax exposures, liens). |
| In-Place Rent | | Rent currently paid under existing leases; may be above or below market rent. |
| Intangible Assets | | Non-physical assets such as IP, contracts, customer relationships, and brand value; transferability can be limited by law or contract. |
| Intellectual Property | IP | Legally protectable rights (trademarks, copyrights, patents, trade secrets) plus supporting documentation and assignments. |
| Inventory Reconciliation | | Matching physical inventory to track-and-trace and accounting records; discrepancies can trigger audits and diversion suspicion. |
| Lab Testing (Cannabis/Hemp) | | Required testing for potency and contaminants; scope varies by jurisdiction and product type; COA alignment to lot/batch is critical. |
| Land Use Approval | | Local approvals (zoning clearance, CUP, permits) needed before/alongside state licensing—often the longest timeline risk. |
| Lease Term | | Length of lease from commencement to expiration (excluding unexercised options). |
| Letter of Intent | LOI | Mostly nonbinding term summary before definitive agreements; cannabis LOIs often include licensing/local approval/lease assignment contingencies. |
| Lien | | Legal claim securing a debt against assets or real property; unresolved liens can block closing. |
| Loan-to-Cost | LTC | Loan amount ÷ total project cost (purchase + improvements); common for construction/value-add. |
| Loan-to-Value | LTV | Loan amount ÷ collateral value (or purchase price), used by lenders to size loans and manage risk. |
| Local Authorization Letter | | City/county document confirming local compliance for cannabis activity; required in many states to obtain/renew state licenses. |
| Lot | | Defined quantity grouped for testing/labeling; “lot” definitions vary by state—misalignment can create compliance issues. |
| Marijuana-Related Business SAR Categories | MRB SAR | FinCEN guidance describes SAR categories (e.g., “Marijuana Limited,” “Marijuana Priority,” “Marijuana Termination”) used by banks serving marijuana-related businesses. |
| Manifest (Transport) | | Required shipping/transport document detailing products, quantities, route, and parties; errors can trigger enforcement actions. |
| Manufacturing License (Cannabis) | | License covering extraction, infusion, and product manufacturing; typically requires QA/QC, sanitation SOPs, and facility safety compliance. |
| Market Approach (Valuation) | | Valuation approach using observable pricing from comparable transactions or market multiples (SDE/EBITDA multiples; cap rates; rent comps). |
| Market Rent | | The rent a typical tenant would pay for comparable space under current market conditions and standard terms. |
| Measurement of Uncertainty | MU | Lab-reported uncertainty range used in hemp compliance determinations and sometimes referenced in testing rules; essential to interpreting “0.3%” thresholds. |
| Microbusiness | | Small-scale license category combining limited activities (e.g., small cultivation + manufacturing + retail), where authorized. |
| Mixed-Light Cultivation | | Greenhouse cultivation with supplemental lighting; performance depends on climate, blackout capability, and HVACD design. |
| Mold / Microbial Risk | | Contamination risk that can trigger holds, recalls, or product destruction; strongly tied to HVACD design and sanitation SOPs. |
| Mother Room | | Area maintaining mother plants for cloning; genetics and mother health can be a key value driver. |
| Monthly Recurring Revenue | MRR | Monthly subscription revenue expected from active contracts; commonly used for SaaS/recurring-service valuation. |
| Net Operating Income | NOI | Property income minus operating expenses (before debt service and income taxes). For cannabis facilities, confirm whether power/HVACD/security are included correctly. |
| Non-Compete Agreement | | Contract restricting seller competition; enforceability varies by state and may interact with regulated ownership rules. |
| Non-Recourse Loan | | Loan where lender’s primary remedy is against collateral rather than borrower personally, subject to carve-outs. |
| Normalized Earnings | | Earnings adjusted to reflect typical ongoing performance by removing nonrecurring, non-operating, or owner-specific anomalies (subject to diligence). |
| NNN (Triple Net) | NNN | Lease structure where tenant typically pays taxes, insurance, and maintenance/CAM (exact scope defined in lease). |
| Odor Mitigation | | Systems/SOPs controlling odor (carbon filtration, negative pressure, scrubbers); often required by local permits and critical for neighbor relations. |
| Operating Agreement | | Entity governance document (LLC/partnership) defining control, transfers, and economics; must align with disclosed owners/control persons for licensing. |
| Operating Expenses | OpEx | Recurring costs to operate a property/business (excluding financing and typically excluding major CapEx). |
| Option Pool | | Shares reserved for future employee/advisor equity grants; affects dilution and is commonly negotiated in VC-backed companies. |
| Packaging & Labeling Compliance | | Rules governing warnings, potency, ingredients, batch IDs, symbols, claims, and child resistance; violations can trigger holds/recalls. |
| Pass-Throughs | | Lease-required tenant reimbursements (CAM, taxes, insurance, certain operating items), defined by the lease. |
| Percentage Rent | | Retail lease term where tenant pays base rent plus a percentage of sales above a defined breakpoint. |
| Phase I Environmental Site Assessment | Phase I ESA | Baseline environmental diligence (records + site visit) to identify potential contamination risks and need for Phase II testing. |
| Post-Money Valuation | | Company value immediately after new investment money is added in a financing round. |
| Pre-Money Valuation | | Company value immediately before new investment money is added in a financing round. |
| Preferred Stock | | Equity class with negotiated rights (preferences, protections, governance), common in VC financings and relevant to payout waterfalls in exits. |
| Premises | | The licensed location boundary; cannabis licenses are typically premises-specific—moving often requires new approvals. |
| Premises Diagram | | Required site map showing rooms, access points, cameras, storage, and workflow; mismatches can delay approvals and trigger findings. |
| Pro Forma | | Forward-looking projection of income/expenses/returns based on assumptions (lease-up, yield, pricing, margins, compliance costs). |
| Pro-Rata Rights | | Investor rights to participate in future rounds to maintain ownership percentage, subject to terms and availability. |
| Purchase Price Allocation | PPA | Allocation of purchase price across asset categories for tax/accounting; affects depreciation/amortization and tax outcomes. |
| Quality of Earnings | QoE | Analysis of how sustainable reported earnings are and what adjustments are needed to reflect ongoing economics; common in larger deals. |
| Quarantine | | Status/area preventing use/sale until release criteria are met (testing results, investigation closure, corrective actions). |
| Recall | | Removal of product from the market due to contamination, labeling, or safety issues; can be voluntary or regulator-mandated. |
| Recapitalization | | Financing restructuring (debt/equity mix) allowing partial liquidity while retaining ownership; common PE strategy in growth. |
| Reps & Warranties | | Contract statements of fact (often by seller) that, if breached, can trigger indemnification or other remedies. |
| Residual Solvents | | Trace solvents remaining after extraction; regulated limits require testing (especially hydrocarbon/ethanol processes). |
| Retail Dispensary | | Licensed retail storefront selling cannabis to consumers/patients; location, local caps, and zoning usually dominate value. |
| Rent Roll | | Tenant schedule showing rents, SF, dates, options, deposits; critical for underwriting NOI and lease risk. |
| SAFE (Future Equity Instrument) | SAFE | Investment instrument converting to equity later (often with valuation cap/discount), typically at a priced round; common in startup financings. |
| SBA 7(a) Loan | 7(a) | SBA-guaranteed loan program commonly used for business acquisitions (and sometimes real estate), subject to eligibility and underwriting rules. |
| SBA 504 Loan | 504 | SBA-backed financing commonly used for owner-occupied commercial real estate and long-lived equipment, typically with bank + CDC structure. |
| Seed-to-Sale | | End-to-end tracking from cultivation through sale, typically implemented via state track-and-trace plus internal POS/ERP controls. |
| Security Camera System | CCTV | Video surveillance coverage and retention requirements; failures or blind spots are common audit findings. |
| Security Plan | | Written plan covering access control, cameras, alarms, visitor procedures, incident response, and record retention, often required for licensing. |
| Secured Loan | | Loan backed by collateral (real estate, equipment, receivables) that lender can claim under agreed remedies if default occurs. |
| Seller Financing | | Seller lends part of purchase price to buyer; documented with a promissory note, collateral, and often subordination terms. |
| Seller Note | | Promissory note documenting seller financing (rate, term, collateral, default, subordination). |
| Seller’s Discretionary Earnings | SDE | Small-business cash-flow proxy typically adding back one owner’s compensation plus discretionary/nonrecurring items; definitions must be reconciled to source records. |
| Social Equity Program | | Licensing preference/support framework for impacted communities; eligibility and benefits vary widely by jurisdiction. |
| Solventless Extraction | | Extraction without volatile solvents (e.g., rosin); still requires sanitation, process control, and testing compliance. |
| Standard of Value | | The defined type of value used (FMV, investment value, fair value), affecting methods, assumptions, and conclusions. |
| State Cannabis Regulatory Authority | | The state/territorial agency regulating cannabis licensing, compliance, and enforcement; authority scope varies and often depends on local approvals. |
| State Track-and-Trace Platform | | State-mandated inventory reporting system used for compliance; states use different vendors/platforms (e.g., Metrc in California). |
| Sublease | | Tenant rents space to another party under the master lease; typically requires consent and does not fully transfer obligations. |
| Subordination, Non-Disturbance, Attornment | SNDA | Agreement aligning tenant rights with lender priority so lease can survive foreclosure under defined conditions. |
| Suspicious Activity Report | SAR | Bank report required under BSA when transactions appear suspicious; FinCEN provides cannabis-specific SAR expectations and categories. |
| Tax Stamp / Excise Collection | | State-specific mechanisms for cannabis tax collection and proof of tax payment, often administered at distribution or retail. |
| Tenant Improvements | TI | Build-out work to customize leased space, funded by tenant, landlord, or both; often a major cannabis lease negotiation point. |
| Tenant Improvement Allowance | TIA | Landlord-provided funds (often $/SF) toward tenant improvements; affects effective rent and deal economics. |
| Term Sheet | | Mostly nonbinding document summarizing proposed investment terms before definitive legal agreements. |
| Total THC | | THC expression that accounts for delta-9 THC plus potential delta-9 from THCA conversion; used in hemp compliance and many potency frameworks. |
| Track-and-Trace | | Required recording of inventory events (plant tags, transfers, sales); errors can appear as diversion—controls and reconciliation matter. |
| Triple Net | NNN | See NNN (Triple Net). |
| True Party of Interest | TPI | Person/entity with defined financial interest or control requiring disclosure; undisclosed TPIs can cause denials, discipline, or license revocation. |
| Trust Account | | Segregated account used to hold client funds (earnest money/deposits) separate from operating funds; rules vary by state—verify who may hold funds and required disclosures. |
| Underwriting | | Evaluating risk and return using cash flow, collateral value, and assumptions to set price/terms (lender and buyer underwriting can differ). |
| Unsecured Loan | | Loan not backed by specific collateral; relies on creditworthiness and cash flow and often carries higher pricing. |
| Usable Square Feet | USF | Tenant-occupied area excluding common-area “load factor”; often paired with RSF (rentable square feet) in office leasing. |
| Vacancy Rate | | Percent of space unoccupied; used alongside absorption and rent trends to assess market tightness and leasing risk. |
| Vertical Integration | | Ownership/operation across multiple supply chain stages (cultivation, manufacturing, distribution, retail); allowed/required/restricted depending on state. |
| Vesting | | Equity earned over time or milestones; common for founders/employees and relevant in acquisitions involving retention. |
| Waste Rendering | | Procedures making cannabis waste unusable/unrecoverable before disposal, often logged and audited. |
| Waterfall (Payout) | | Rules describing distribution of proceeds among stakeholders (debt, preferred, common), defined by contracts and cap table. |
| Working Capital | | Current assets minus current liabilities (often adjusted in deals); in cannabis, define treatment of cash, taxes payable, and inventory due to compliance and cash cycles. |
| Working Capital Peg | | Target working-capital level delivered at closing with post-closing true-up if actual differs. |
| Zoning (Cannabis) | | Local land-use rules controlling where cannabis uses are allowed, often via overlays/green zones, buffers, and CUPs; a primary gating factor for deal feasibility. |
