What It's Worth: Value and Business Challenges in the Budding Cannabis Industry (PDF)

August 2016 PDF (66 pages)

BVR (editor)

Business Valuation Resources, LLC

The legal cannabis industry is a budding business with recreational demand now exceeding that for wine, craft beer, and organic food. It is estimated that sales of legal marijuana in 2016 will grow to $7.1 billion, an increase of 26% over 2015. At the same time, news comes out every day indicating that the associated laws and guidance from accrediting organizations and the government are quickly changing.

As with other businesses, there is real money to fight over when the owners of a cannabis business divorce a spouse, dispute a partnership agreement, gift shares, or sell the enterprise. Position yourself to successfully complete a valuation engagement in this growing, evolving and challenging industry with BVR's new special report.

What It's Worth: Value and Business Challenges in the Budding Cannabis Industry helps you navigate the swirl of issues that surround providing services to cannabis businesses. The authors, experts who know this industry inside and out, walk readers through the unique aspects of a cannabis business’s financial records, key valuation challenges, benchmarking data, and more. In addition, this must-have resource addresses the ethical and legal questions encountered when servicing this industry and describes the attempts at a solution from accrediting boards and the government. Ensure you're current on all of the considerations you need to take into account when valuing or servicing cannabis businesses.

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Highlights of the report include:

  • Navigate the ethical and legal questions encountered when servicing cannabis businesses: Experts explain these issues and describe the attempts at a solution from accrediting boards and the government
  • Guidance on key value drivers for cannabis businesses: Ensure you are considering the key components of value within the cannabis industry, including state regulatory regimes and how they are perceived by the federal government, business location, contracts, leases and vendor relationships, and intellectual property
  • Overcome important valuation challenges: Learn how the challenges of limited benchmarking data and a lack of reliable historical cash flow information have been dealt with in states that have legalized marijuana
  • Get cannabis business benchmarking data: Readers get a snapshot of financial benchmarking data from BizMiner, including revenue, liabilities, and operating ratios.  An additional resource for important benchmarking data is the 2016 Marijuana Factbook (purchasers save $50 with special code included in this special report)
  • Understand the unique aspects of a cannabis business's financial records: Learn what financial records are kept when you are working with a legal/illegal business that deals exclusively in cash, but pays taxes on the proceeds

Table of Contents:

Introduction (Ron Seigneur)
Chapter 1.  The Unique Challenges for Business Valuation in the Cannabis Industry
Chapter 2.  Professional Ethics for Those Servicing the (Illegal) Cannabis Industry
Chapter 3.  Valuing a Cannabis Business:  Normal as Apple Pie?
Chapter 4.  Questions on Valuation and Cannabis Businesses:  Replies From Experts in the Field
Chapter 5.  IRC Section 280E After IRS Chief Counsel Memorandum 20150411
Chapter 6.  Ninth Circuit:  Legal Or Not, Marijuana Facility Cannot Deduct Its Expenses
Chapter 7.  Best Practices for a Marijuana Business’s Books and Records
Chapter 8.  Four Value Drivers for a Marijuana Dispensary
Chapter 9.  What Are Investors Looking for in Marijuana Dispensaries?
Chapter 10.  Medical Marijuana Dispensary Financial Report From BizMiner
Chapter 11.  Selected Bibliography and Sources of Data