Nevada’s Cannabis Industry Still Fluid, Making it a Great Time for a Transaction
With lines that stretched around dispensaries at midnight July 1, recreational marijuana sales in Nevada have been the hit that fervent supporters and, frankly, business owners had so desperately hoped it would be.
Sales volume was reportedly up five times over the average pace under medical-only regulations, and while that pace may not be sustainable, it does at least prove that there can be plenty of green in green.
With the number of dispensaries and cultivators limited by state statute, what’s an enterprising individual to do if they missed the land rush? Well, for starters, this is a great time for mergers and acquisitions in the marijuana industry.
Recognizing that, one international company set out to buy a Las Vegas cultivation and production operation. Because the company’s home country frowned on involvement in the marijuana industry, Ideal Business Partners stepped in to smooth the process over, and ensure everyone stayed on the right side of regulation, while still structuring a transaction that was beneficial to all parties. Navigating the constantly changing regulations is daunting, but we can help your marijuana business keep away from the murky, complicated waters that is the Nevada medical marijuana and now recreational marijuana regulatory framework.
Yep. You read that right: We don’t get lost in the weed weeds.
There are hurdles to clear endemic to the marijuana industry, banking being the most crucial. Unfortunately, the marijuana industry is still cash-only, and those large deposits of cash raise red flags for banks. Because marijuana is still under federal prohibition, those cash deposits can’t be dropped into an FDIC-insured institution without fear of onerous and unending audits. It’s the “I’m not touching you” of regulatory actions.
By using a structure similar to a Management Services Organization—something IBP has vast experience with in the healthcare industry—we were able to create a functioning banking arrangement that satisfied all legal and practical needs.
“There’s a fixed amount [of marijuana entities] all competing with each other, and I think it’s going to make sense for a lot of them to consolidate,” IBP’s Caleb Zobrist said. “You could have a dispensary currently making little net profit, but it may be worth $5 million to a buyer. A buyer may bring necessary resources to tweak processes and turn a profit. There’s lots of opportunities on both sides.”