How To Sell a Cannabis Business License in California

At Manzuri Law, our California cannabis attorneys have been representing industry professionals since 2008 and have met each client’s business queries and challenges with customized legal solutions that fit their unique needs.  

Often, that involves representing individuals and entities who are working towards exiting the industry or being acquired and wondering, “Can I sell my California cannabis license?” The simple answer is, no because California cannabis licenses are non-transferable. They are attached to the registered company (or individual in some cases) — the license holder.

However, that does not mean you do not have options. Our cannabis lawyers in California

have managed over $100 million in mergers and acquisitions transaction values for our clients in just over a decade. 

We can help you verify a cannabis business buyer, ensure the new owner’s licensing application is precisely prepared and submitted to the Department of Cannabis Control (DCC) while developing ownership option contracts, purchase and sale agreements, and provide strategic advising and transaction structuring.

How To Prepare Your Cannabis Company For Sale In California

When commercial cannabis business owners place their company on the open market, the transition to a new owner is complex. However, in the cannabis industry, there are additional regulatory and licensing factors that require stringent compliance to achieve seamless success.

The reality is, selling a cannabis business in California requires due diligence and a lot of paperwork.

When preparing your California business for sale, begin by compiling the following important

documents, so you can see the broader picture of what the next steps will look like:

• Proof of Ownership
• Licensing Documents
• Local Permits
• Bookkeeping and Accounting Records
• Current Contracts, Leases, and Other Agreements
• Tax Records
• Disclosures
• Term Sheets
• Offering Memorandum

The goal, for both the cannabis business buyer and seller, is to continue operations without

disruption. That will require proper planning and procedures  to avoid license denial and closure.

Our California cannabis attorneys at Manzuri Law can assist you with the proper planning to ensure a smooth transition, so you can exit the company with confidence.

At Manzuri Law, Our Skilled Cannabis Attorneys and Specialists Also Focuses On The Following Practice Areas:

• Administrative Hearings & Appeals
• Cannabis Criminal Defense
• Cannabis and Hemp Litigation & Dispute Resolution
• Corporate & Business Law
• Government Relations, Regulations & Policy
• Cannabis Consulting and Expert Testimony Services
• Hemp & Cannabinoids
• Intellectual Property
• License Violation Defense
• Mergers & Acquisitions Transactions
• Psychedelic Law
• Real Estate, Land Use & Zoning Advice
• Regulatory Compliance & Licensing
• Risk Mitigation Advice & Counsel
• Venture Capital
• Who Regulates the Cannabis Industry
• How to Apply For a Cannabis License

Determine What the Ownership Transfer Will Look Like

As the existing owner and license holder, you will need to determine if the cannabis business

will continue to operate during the ownership transfer, or if you want to close shop until the cannabis license transfer is complete.

While both are valid options, there are critical regulatory requirements for both.

If all existing owners transfer their business interests to the buyer, the business cannot operate

under the new ownership structure until it submits a new license application, and it is approved.

If one or more individuals meet the definition of an owner, and at least one existing owner

stays under the new structure, the business can operate under the current license while the new owner’s licensing application is pending.

Once the purchase transaction is complete and the contracts are executed, you will need to notify

both the state and local authorities that an ownership transfer has occurred, providing corresponding paperwork with all the details of the transfer.

California requires notification be given to the state within 14 calendar days of such a

change; local jurisdictions each have their own requirements so be sure to check in with the local regulator to ensure compliance. We can help with that, too.

No matter how you plan to sell your existing cannabis business, partnering with our experienced California cannabis attorneys will help streamline the process, so you know what to expect during each step of the transaction. Contact one of our California cannabis law firm specialists today by phone at (310) 912-2960 or online to learn more about your legal options to place your business on the market.