Information about Cannabis Industry Mergers and Acquisitions
Mergers and acquisitions (M&A) between privately held corporations involve a variety of complex business and legal considerations. In order to effectively navigate this terrain, it’s important to understand some of the underlying dynamics and some of the issues that may arise.
This is especially important in the cannabis sector. As an industry in its infancy, there is a great amount of volatility, dynamism, and hype along with a scarcity of information surrounding the M&A process which makes for significant opportunity, but also significant risk. In this article, we lay out several things that any prudent businessperson should keep in mind when contemplating an M&A opportunity.
Challenges in the cannabis regulatory environment
In every industry, the regulatory environment is a factor that needs to be understood and appreciated when considering an M&A opportunity. This is especially important in the cannabis industry, for several reasons:
*First, the industry is relatively young. This applies to the Canadian national industry as well as the 10 American States where cannabis is legal. This means the business and legal landscape is constantly changing as new laws and regulations are passed and legislators try to figure out what works and what does not. More and more States adjust the legality of cannabis in their jurisdiction every year, meaning there is a high amount of volatility in the regulatory environment.
*Furthermore, there is a fragmentation of the regulatory environment. For example, in the United States, cannabis is legal in some states, illegal in others, partly legal in some, and illegal at the federal level. In Canada, there are varying regulations across provinces that might need to be factored in when considering M&A activity.
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