Why considering the time frame is critical for cannabis valuations

What’s the right revenue per square foot? What’s a realistic business outlook for cultivators? Get realistic market forecasts, state-by-state insights and benchmarks. Get the 2023 Factbook.

(This story is part of MJBizDaily’s premium subscription service, Investor Intelligence.)

In any valuation exercise, including hemp and cannabis companies, there is always some discussion about exactly when in time – past, present or future – the EBITDA is examined.

As exotic as hemp and cannabis companies might seem to traditional investors, valuations of these companies still follow traditional performance indicators such as EBITDA, OPEX and COGs.

Moreover, hemp and cannabis companies are purchased, sold or invested in on a “multiple of EBITDA” basis. It’s a tried-and-true method of achieving a consensus price between sellers and acquirers.

But even when using the multiple-of-EBITDA method, a company’s value depends on the operative time frame that an acquirer/investor will agree to when examining financial statements.

Read more about how the operative time frame can help bridge the gap between buyers and sellers at Investor Intelligence.