What Cannabis Operators Are Looking For In An Acquisition In 2024

Despite 2023 being a shaky year for the cannabis industry, the fourth quarter revealed a light at the end of the tunnel. The nearing of federal legalization and rescheduling has sparked operators all across the country to get back into business acquisition mode. Business brokerage Green Life Business Group noticed a spike in call volume from operators looking to expand their footprint to gear up for cannabis rescheduling and federal legalization. After spiraling downward in 2023, things are looking up and new deals are on the horizon.

What Are Operators Looking For? 

Many businesses ran out of cash in 2023 and are looking for an exit or help with getting their operations back to the success they enjoyed in the past. Struggling businesses became distressed assets, enticing multistate operators (MSOs) to acquire them for pennies on the dollar, which caused the number of deals to pick up late last year and into this year. 

Gross numbers no longer carry the same weight they once did in business evaluations. Seasoned operators and MSOs now look at net and final earnings before interest, taxes, depreciation and amortization (EBITDA) numbers. High-net-income businesses are highly sought after with MSOs and experienced operators competing for them. 

An example of this is a cannabis dispensary in a prime location in Santa Ana, California, with a net income of $7 million. The store averages 925 visitors per day, grossing almost $21 million per year. It will accept offers at an auction on Feb. 29. 

Distressed assets in high-visibility locations and high-net-income businesses are what operators in the industry are looking for. For more information please click here.