Marijuana Business Magazine - January 2017

by John Rebchook Tips for finding businesses on the block at fire-sale prices M arijuana businesses are a hot property. Scores of new grows, retail- ers, ancillary firms and infused product manufacturers are opening their doors as recreational and medical markets sprout up across the nation. Real estate prices for marijuana operations are sky high, as are valuations on cannabis businesses. But nothing goes up forever – a rule of thumb that can ultimately be a boon for bargain hunters looking for a good deal, be it a home, a stock … or a marijuana business. If the industry takes a downturn either nationally or in specific markets, underperforming companies could put themselves on the block at discounted prices. “All commodities, whether you are talking about corn, natural gas or oil, go through a boom-and-bust cycle,” OPPORT said Jonathan Rubin, CEO of New Leaf Data Services, which tracks wholesale marijuana prices. “Cannabis is no different.” There hasn’t been a huge wave of distressed sales yet – the industry is still in its growth phase – but many think a correction could be coming in the next three to five years thanks to factors ranging from oversupply to industry consolidation. And there are opportuni- ties now in some of the more mature markets such as Colorado. While the real bargains might not materialize for several years, investors and entrepreneurs can prepare early to capitalize on any correction when it does occur. Following are tips and advice on buying distressed marijuana businesses and real estate when the time comes. 48 • Marijuana Business Magazine • January 2018