In my ten years of advising and guiding cannabis companies from a corporate, transactional, and M&A perspective, and especially since 2012 (when Washington and Colorado legalized), every cannabis market in which I’ve worked has experienced a period of extensive business failures, consolidations, and market stress. And it’s that time now for California cannabis (and that was already happening before COVID-19 struck, which is actually a kind of economic shot in the arm for cannabis businesses, all of which have been deemed essential and are allowed to continue to operate). It’s been nearly two years of licensing, and in a strong local control market like California, it’s no surprise that many cannabis companies (of all sizes) are either going under or headed that way (and will still likely be so post-COVID-19 when the level of sales goes down again). What that means is that enterprising investors experienced with distressed assets have significant opportunities before them.
Many things are causing this uniform failure across California’s cannabis marketplace. The first is local control. To get a California cannabis license, your cannabis business must first secure local authorization to proceed. There are 482 cities in California and 58 counties. Every single one of