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Cannabis M&A (short for mergers and acquisitions) in California is much more complicated and problematic than in other states. The biggest reason for this is that licenses are not transferrable, which all but eliminates the possibility of asset sales. In turn, this means that deals are much more complicated for both buyer and seller, and probably kills a lot of potential deals before they start. That might change soon, as the state is considering a bill that would allow license transfers.
Why are asset sales so important in cannabis M&A?
I recently wrote a post for one of our firm’s sister blogs on the top 5 issues buyers face when buying businesses in regulated industries. Here is what I wrote about the difference between “asset sales” and “business sales” in the M&A context:
[W]hen people talk about M&A, they often think of buying the entity (a “business sale”). However, it’s usually better practice to simply buy the assets of a business with a brand new entity (an “asset sale”). In an asset sale, the buyer will generally get all the assets, and not just the physical ones – IP, name, leases, etc. TheRead full article on HarrisBricken
