Starting a business in the cannabis industry may be exciting, but it’s far from simple. Despite the immense rewards you could reap, starting a new business from scratch is time-consuming and expensive. Not to mention the numerous licensing and legal requirements associated with such a highly-regulated industry.
While this may sound discouraging, you do have another option. You can buy an existing cannabis business that’s up for sale.
Benefits of Buying a Cannabis Business
Buying a cannabis business comes with a few benefits over starting one from scratch:
- While you should research and understand your target audience, you gain access to an existing customer base.
- An established business comes with everything you need to grow/sell cannabis.
- You may be able to retain most, if not all, current employees.
- You can avoid the time and hassle of finding a base of operations.
- You avoid the cannabis license application process (although you will still need to follow state and local laws to purchase the business legally).
7 Essential Questions To Ask Before Buying a Business in the Cannabis Industry
As much as you might want to buy a cannabis business, you don’t want to jump on the first opportunity. You’ll need to ask yourself (and the owner) several essential questions to ensure you’re making the right decision.
1. Why Is the Owner Selling?
While some owners are truthful in their responses, others may try to cover up an underlying issue they want to offload.
2. Is the Location Ideal?
You’ll need to consider several factors, including:
- Foot traffic
3. Is the Price Good?
Many entrepreneurs are excited to get into such a rapidly growing industry. In response, some business owners are pricing their businesses too high. Even if you can afford it, you’ll want to make sure it’s a worthwhile investment. Find out the reasoning behind the owner’s pricing.
4. Can I See the Past Sales and Operating Costs Data?
These figures provide a clearer picture of the business’s finances. Be wary of anyone who hesitates or refuses to share the data.
5. Will I Need Any Major Renovations or Secondary Costs After Purchase?
Renovations and other needs after the initial purchase add to your initial investment. You’ll want to ensure they’re within your budget and worth the cost.
6. Who Are My Growers/Distributors?
You’ll want to know who’s supplying your business with its products and what those supply details look like. You may also want to find out if your growers/distributors are local, especially if supporting local is important to you or the business you want to purchase.
7. Do I Have a Business and Marketing Plan for After the Sale?
While the business may already have established operating procedures, what are your plans to help it grow and succeed?
How To Find and Buy a Cannabis Business for Sale
If you’ve decided buying a cannabis business is the right choice, here are a few places to check to start shopping:
- Search Online: Websites like 420Property focus solely on cannabis businesses for sale. Other commercial real estate sites allow you to narrow your search using filters.
- Explore Your Local Area: If you learn about a potential business opportunity in your local area, contact the current owner directly for more details.
- Contact a Cannabis Business Broker: A broker with experience in the cannabis industry can help you find businesses for sale that meet your criteria and assist you with handling inquiries, negotiations, and closing a deal.
Are You Ready To Buy a Business in the Cannabis Industry?
Whether you start from scratch or buy an existing business, the cannabis industry is full of exciting opportunities. And if you find you need some financial assistance along the way, Bespoke Financial is here to help. With financing options such as lines of credit, dispensary loans, and invoice financing, we’re here to help you grow your cannabis business and achieve your goals. Visit us online today to learn more!