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What Are The Prospects Of Cannabis Based Businesses And Industry In California?

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Comments & Replies: 1     Views: 3165     Posted By: Jaime Ortega  

Jaime Ortega, a Cannabis Industry Consultant, Due Diligence Specialist and Advisor reviews the new Administration's view & California's new legislation that will affect both buyers and sellers in the California Cannabis industry. Read what factors will affect both buyers & sellers in this industry.

Topics: Buying A Business, Legal Issues, Legislative Issues     Tags: buying a business, legal issues, selling a business



Recently there have been reports about the new Administration's view on the cannabis industry. Specifically that it respects medical marijuana usage in States that allow it, but does not support recreational marijuana proliferation. This is a departure from the Obama Administration policy on respecting a State's right to choose how they regulate their own legal cannabis markets, even in recreational States. Many industry experts have stated that there isn't much that can be done by the Federal Government to unwind the current progress and momentum legalized cannabis supporters have enjoyed over the years, but it is worth noting the current climate in the industry for further examination. The United States currently has 28 States and the District of Columbia that have passed laws allowing for the cannabis industry. Eight of those States and the District of Columbia have passed recreational laws allowing for adult-use sale, production, and manufacturing of cannabis.

Just a few days ago, California Lawmakers introduced AB-1578, which sends a clear message in response to what is the perceived new Federal position regarding recreational cannabis legalization. In general, the Bill stops California law enforcement from communicating, assisting, or working with federal law enforcement on marijuana prohibition activities.

In addition, in a recent MarketWatch article published on February 11, 2017, the following was stated which sheds light on the current administration’s policy on the legal cannabis industry, as opposed to the newly appointed Attorney General’s view on the industry. "But in a Trump presidency, he’d [Sessions] be asked to forward the Trump agenda and not his own, and a spokesman for President Trump made it clear Sessions would be implementing the Trump agenda, which is promising for the marijuana industry."

As has been the case in this industry for some time, it seems that those entrepreneurs that see a future for the industry will benefit while those that are discouraged by challenges will not. There is a definite similarity to prohibition era alcohol and the cannabis industry. Who will be the first Anheuser-Busch of the legal cannabis industry remains to be seen. Many companies are currently jockeying for position in what will most likely be the next great American industry.

What are the prospects for the legal cannabis industry now that California has legalized recreational (adult-use) cannabis production, manufacturing, and sale?

It is said that California’s move to legalize recreational cannabis will result in a doubling of the size of the legal cannabis industry, nationwide. California is truly an interesting case study in that it was the first state to legal medical cannabis over twenty years ago, in 1996. However, in being the first state, there were obvious gaps not filled in perfecting the methods for production, distribution, and overall regulatory framework for how the industry were to exist with the State. Those gaps were later filled by States like Colorado, Arizona, Washington, Nevada, and several others that implemented detailed regulatory systems that implemented licensing for dispensaries and cultivation facilities within their States.

In 2016, California enacted the Medical Marijuana Regulations and Safety Act (MMRSA), later revised to be named the Medical Cannabis Regulations and Safety Act (MCRSA), which implemented a regulatory structure for dispensary and cultivation facility licensing. This law finally set forth a safe harbor for California cannabis entrepreneurs that allowed for zero criminal or civil repercussions for cannabis business operators that were operating within the confines of the law. In November of 2016, California voters passed the Adult Use Marijuana Act (AUMA) in California, which will work in concert with the MCRSA. According to the State, it is expected that both laws will be implemented by the State in early 2018 and the MCRSA is already in effect meaning cannabis operators are subject to and protected by those laws as long as they are abiding by them.


  Helpful Resources To Assist In Selling And Buying California Businesses

Michael Davidson, Business Broker - Southern California

Los Angeles Business Broker providing M&A quality services for Small Business Owners. We leverage our technology and expertise to Simplify & Expedite the Business Sales Process. Matching the right buyer with the right business is how we define success.

Diane Boudreau-Tschetter: Escrow And Bulk Sale Services

California Business Escrow, Inc. is a full service independent escrow company serving all of California and has expertise in a wide range of escrows. Our team prides itself on providing an exceptional escrow experience. For more info phone Diane Boudreau-Tschetter at 888-383-3331 or 209-838-1100.

Chris Seaman, Business Broker - San Diego County Area

Founded in 1994, First Choice Business Brokers has accelerated to become one of the most successful Business Sales Organizations in the world. Our team of agents have gone through extensive training to become experts in the field of business brokerage. Call Chris at 858-578-4111 for more info.

Jaime Ortega: Cannabis Industry Consulting & Due Diligence

We offer Cannabis Industry Consulting & Due Diligence Services to business buyers, owners, sellers, entrepreneurs throughout CA. We offer assistance with: licensing issues, cultivation facilities, products/ services, dispensaries, corporate strategy, & project management. Call 866-591-7802 for info.

Elizabeth McGovern: Escrow Services - SF Bay Area

McGovern Escrow Services, Inc., is a leading independent escrow company. We are a trusted partner with our clients, assisting them through the tangled bulk sale & liquor license transfer process. We provide attentive, quality & innovative customer service. Phone Elizabeth McGovern at 415-735-3645.

Peter Siegel, MBA - SBA Loans, Non SBA Financing Assistance

For over 25 years I have provided niche business purchase financial advisory and loan placement services with SBA and Non-SBA Loans, Retirement Plan Conversions, Private Investors, etc. Financing amounts available: $20K to $7MM. Call today to get pre-qualified or receive financing: 866-270-6278.

Rick Carlson, Business Broker - Southern California

You Will Never Feel Lost In The Shuffle. Many Brokers Simply Send Out An NDA And That's The End Of Communication. All Buyers Receive A Personal Meeting With An Ace Acquisition Specialist So They Can Recommend The Perfect Business For You. Phone Rick direct at 800-985-4939.

Mark Chatow, Esq.: Legal Services For Buying, Selling Businesses

Mark has a broad range of small business purchase & sale experience from analyzing potential acquisition targets to successfully guiding buyers and sellers through the purchase & sale of small businesses. Mark can assist with contracts, negotiations, legal matters, etc. Reach Mark at 949-478-8393.


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