What's Your Cannabis Business Worth?

It’s not always easy to determine the value of a cannabis business, which is why it is important to get a Broker Price Option (BPO) or evaluation from a seasoned cannabis business broker that has a track record of evaluating and closing cannabis business transactions. Oftentimes, evaluating the value of a cannabis business is as simple as determining a fair-market multiple based off the gross revenues or EBITDA, other times, the value is based on a variety of combined factors which can include any the following: 

• Transferability
• Business Structure (sole proprietor, LLC, or corporation)
• Gross Revenue (if any)
• EBITDA (earnings before interest, taxes, depreciation, and amortization)
• License Type
• Rarity of the License(s)
• Real Estate (value of real estate included in the sale, lease terms, user permits, etc.)
• Fixed Assets (equipment, fixtures, tenant improvements, etc.)
• Proprietary Technology (Standard Operating Procedures, cultivation technology, digital assets)
• Brand Equity/ Goodwill
• Current Inventory

If you choose to sell your cannabis business after the BPO, during the sale process, potential buyers will (after signing a non-disclosure agreement), want to review your business documents during their due diligence process. Things potential buyers will want to review can include:

• Organization Formation Documents (Articles of Incorporations)
• License Information for State and Local License Approvals
• State Seed-to-Sale Tracking Information (if any)
• Profit/ Loss Statements
• State & Federal Tax Filings
• Business Plans/ Proforma’s

The cannabis industry is quite volatile, as such, cannabis business values can change quickly. Don’t sell your cannabis business short by assuming the current value–get a no-obligation business valuation for your cannabis business: