As cannabis laws and regulations continue to evolve, and more cities and counties continue to open their proverbial doors for cannabis licensees, California cannabis businesses have a unique opportunity to prepare for potential mergers and acquisitions (M&A). M&As can be an exciting prospect for both new and veteran cannabis industry professionals throughout the state. Unfortunately, the idea of being acquired can lead to thoughts of short-sighted financial gains, instead of well-planned exit strategies. The same is true for mergers. Without the proper due diligence, you could be combining your respected brand with a company that has a less-than-stellar reputation.
At Manzuri Law, our California cannabis attorneys have managed over $100 million in industry mergers and transaction value, and have a few tips to help prioritize your M&A potential.
Plan for a Potential Merger or Acquisition from the Beginning
Properly structuring your cannabis business from the start provides a stable foundation for your company to enjoy the legal protection and scalability that makes it attractive to potential merger opportunities.
Once your business is up and running, it is important to partner with a leading California cannabis law firm that will ensure your company is:
- Complying with all local, county, and state cannabis industry licensing and operating regulations.
- Meeting or exceeding all safety protocols associated with your type of cannabis business.
- Conducting internal audits that allow balances, liabilities, inventory, and profit/loss statements to be readily available.
At Manzuri Law, we will help prepare your cannabis company for mergers and acquisitions from the beginning of our partnership, even if that is not part of your immediate plan. Being ready from the start can make your California cannabis company more attractive to prospective partners or larger companies that want what you have.
Set Your California Cannabis Business Apart by Having More to Offer
In California, cities and counties have collectively issued tens of thousands of cannabis business licenses for cannabis activities that include cultivation, manufacturing, distribution, testing laboratories, retail, and microbusinesses.
This means the cannabis industry is a highly competitive landscape, especially in saturated markets like California. The most obvious merger attractions will lean towards existing businesses that have remained compliant with local, county, and state regulations, and are not associated with previous legal action or negative publicity that have tarnished their brands.
Some intangible offerings that make a cannabis business attractive to mergers may include maintaining strong partnerships with customers and vendors in order to preserve as much of your existing customer base as possible in addition to developing well-crafted standard operating procedures that nurture employee retention.
The tangible offerings that make successful cannabis businesses more suitable to mergers are those that offer complementary products and services to the company they are merging with, which will mean something different for each company to potentially attract more M&A interest.
Our experienced California cannabis mergers and acquisitions attorneys can help you outline your company’s strengths and identify potential suitors who may benefit from a properly formed partnership with or acquisition of your organization.
Partner with an Experienced California Cannabis Merger & Acquisitions Legal Team
Starting your own California cannabis business is no small feat and growing that business to the point where it becomes an attractive merger or acquisition target is an incredible accomplishment. We know that you did not get here by overlooking important details. When it comes time to partner with another industry professional, you may not think hiring an attorney is necessary. After all, you know what you are doing. We have no doubt that is true.
However, partnering with skilled California cannabis attorneys provides a critical vantage point into the world of due diligence. While due diligence is an integral part of any merger or acquisition, it is especially important in the cannabis industry, and will fully impact what and how much is offered between the parties conducting the deal.
Our experienced cannabis M&A lawyers take the time to evaluate the businesses to make sure they have the expected cash on hand, requisite licenses, records of taxes paid, and capitalized assets.
We insist on transparency and believe the information should flow both ways during any M&A transaction. Having your M&A team in place and doing your due diligence on the company you are merging with or being acquired by will help to ensure the process goes as smoothly as possible. That is what we do.
Contact one of our California cannabis law firm specialists today by phone at (310) 912-2960 or online to learn more about how we can help protect your operations during a merger, so you get what you deserve from your new partnership.