The 2020 Collapse and Consolidation of the Cannabis Industry (Q&A)

The 2020 Collapse and Consolidation of the Cannabis Industry (Q&A)

You may be seeing headlines such as “Sales up 300%” or “Booming Business for Cannabis Operators”, but rarely do you hear anyone cover profitability or sustainability of the business…and that’s the kind of topics we want to chat about.

​​​​​​​In this video, Derek and Jim talk about trends that we are seeing in the numbers of cannabis businesses, what these mean, and how we think this will play out over the next 6-8 months.

If you need help with your cannabis accounting or financial analysis, then please reach out to us today at: https://greengrowthcpas.com/get-started/ or call 800-674-9050.

The questions include:
Can you share any comps around purchases of businesses and, specifically, licenses? (07:45)

How to Structure an Earnout in the cannabis industry? (13:24)

Is vertical integration still a good idea? (13:57)

What advice do you have for a small craft cannabis business? (15:12)

What segments of the industry are most at risk and why? (17:29)

When will the Industry go Federally legal? (20:14)

Which market segments are we most optimistic about? 21:14

Price per pound fluctuates seasonally, what should we do for forecasting and planning? 22:50

Are there any comps for license sales? 23:29

My business has a high-interest loan (14%) that we took from private investors and the payments really high.  We can cover product costs, rent, and everything else, but the loan payments are way too high to pay and keep up with. What are people doing with their debt payments?  25:59

How do you find buyers for your cannabis business? 27:42

Sales are up, but how long will this last?  30:22

What happens when you find out a business is not being truthful during due diligence? 32:02
As a distributor, should I purchase a farm to increase supply or go into retail delivery for better margins? 33:28

What are fair prices for delivery licenses in the Bay Area? 38:49

Is the delivery portion of my microbiz license the most valuable part? 40:26

Are we seeing a consolidation in the hemp and CBD market? 42:43

How do you get credit card processing for your cannabis business? 46:15

What kinds of expenses can a delivery service add to cost of good sold? 47:41

What percent of dispensaries do you think are operating illegally? 51:07

Should you put each license into its own entity? 53:41