As more and more states relax their cannabis laws, a growing number of investors are taking a closer look at opportunities in the marijuana industry. But how will an investor know if the opportunity is sound? Can an investor spot inefficiencies in operational practices? Is the business fully compliant? Is the investor aware of investment limitations and requirements of the state?
Furthermore, there are a number of factors that may prevent an individual investor or fund from making a smart and informed investment. For example:
Some of these canna-business’s financial statements may not be reliable, and there is no way to confirm numbers because they are not publicly traded.
Some current operators may not have the business background, knowledge, and experience to be successful in a fully legalized framework.
Some current business opportunities may ultimately be illegal once full legalization is implemented in the state. The legal and business landscape of cannabis is continuously evolving, adding a level of complexity not typically associated with investments in other industry sectors.
Fortunately, Cannabureau in comprised of a team of cannabis attorneys, business advisors, and experienced cannabis operators to help investors navigate and assess these opportunities. We advise investors on how to invest in the cannabis industry, vetting potential partners and facilitating connections in the industry. We assist in evaluating risk level through our stringent investment criteria.
At Cannabureau, our consultants have the knowledge and experience necessary to assist investors and private equity firms in organizing and completing due diligence reviews.
Areas analyzed include:
Quality of reporting revenue and cash flow
Quality of record keeping and accounting systems
Appropriateness of accounting policies and procedures
Quality of collateral to secure the transaction
Quality of internal controls and management routines
Projections of future financial performance
For a business opportunity to be seriously considered for investment, the business must have the following:
Dynamic Founders Founding team must be fit for purpose, internally compatible, incentivized to succeed, and demonstrates gift.
Good Profit Company must be able to thrive through the end of cannabis prohibition, and must have a positive impact towards this end.
Adjacent Markets Company must serve the cannabis space with a differentiated product but may be able to grow revenue in non-cannabis sectors.
Proven Traction Company must have the distribution and marketing engine that creates top line high growth led by an experienced team. Demonstrates path to attractive cash on cash returns.
Compliance Company must comply with best practices to ensure appropriate and effective legal, regulatory and tax structures.
The information and recommendations from Cannabureau's due diligence team help mitigate risk, clarify potential return on investment, and ensure the agility to efficiently close deals.