#like why would cap be working on a secret operation to build a bomb just to then bury it in the garden with the blueprints

[beiyuanism]

something something "you must take that emotion and you must bury it" something something "he left me (...) so i had to bury it on my own"

[jeromesxreader16]

Such a Joker (53)

Part 52 Here!

~o0o~

I pack two sandwiches in my purse and proceed to cover my hair with the large silk scarf. "Where are you sneaking off to?" Babs asks walking past me and downing a drink. "Secret date? I figured you would get sick of the pale faced clown." I smile at my hands. I could never tire of my boy. I'm as crazy as him, maybe more, but he would never turn me away, and I could never leave him.

"I'm married." "Even better." I narrow my eyes at her. "Babs, I'm going to see my dad." She widens her eyes. "Now you're asking for a death wish." I walk out the door, my heels clicking every step. "If you say so."

I walk into the GCPD and can sense the chaos and tension thickly canned in the air. Not seconds later two individuals start brawling over bread. "Hey! Break it up!" My father pushes them back. "For all the new people here... everyone is welcome in Haven, but there are rules. And one of them is we leave the fighting outside. Government already thinks we don't deserve help. We have to show otherwise. Gangs want to tear themselves apart outside, that's their business. In here, in Haven... we help each other survive."  I hum with a slick smile as the two dispute the issue and the tension falls. Saved for another day.

I walk up to him nudging his arm. "Nice speech. I think it worked." He turns to me and gasps, but recovers quickly. "(Y/n). You're so big. No... Just-" "Pregnant, dad." He nods smiling. "So what happens when they find out the government abandoned them?" He sighs, shaking his head. I pat his back. "Come on paper man. You need some real food." I pull him into his office and remove the disguise. "Italian sub for you, and tuna for me." "You hate tuna." I smile sitting down. "They don't." I pat my swollen tummy. "So there are two of them?" I nod smiling.

"And you're happy? He treats you well?" I nod again smiling at him. "Of course he does. He's not a monster, dad." He grabs my hand over the desk and squeezes it. "I don't... like him. You know this. He destroyed the damn city for christ's sake, but he is the father of my grandchildren, and the husband of my only daughter, so I can promise you... I will never kill him." I kiss his hand and smile. "Who knew that'd be so comforting to hear."

~

I walk into the elevator with the smile ghosted over my lips. Crackling from the speaker erupts my mind causing me to shake and grab the wall in fright. "Aw, honey, I'm sorry." Ecco's voice pipes up from the speaker. I wave my hand in front of the camera with a smile. "No worries. All good here." I laugh placing a hand on my stomach. "Where is Jerimiah?" "Working down below. Would you like me to get him?" I smile up at the camera. "Let me go down."

"Uh... Miss, I think we should wait. He doesn't want you around the-" I press the button to the bottom floor faster than light. "Oops," I smirk up to Ecco as the elevator skips the main floor and descends below.

The two doors slide open revealing a steamed room with the funk of hard labor. I step on the uneven ground and see Jerimiah fanning himself as he watches his workers. I rest my hands on his shoulders and kiss his cheek. "You're working hard." He spins around with a glare. "And you're not supposed to be here." He grips my hips pulling me towards him.

"I missed you." I nuzzle into his chest. He hums as we rock back and forth. "I missed you, my love. Come on. No lady should be exposed to this heat." He places his hand on the small of my back leading me to the elevator.

Holding me the entire way up and then carrying me to our bed, never letting us go. "Are my darlings all suggled up?" He asks resting my head on his chest. The icy colored flesh proving wrong to the touch of fire on my fingers. "Yes, Jer." I mumble feeling my eyes draw to a close. "Never will I go a day without my family... even your father." He kisses my head before I can ask the question.

~

Jeremiah POV:

My workers work endlessly day and night to break the walls of the under the earth. Slowing down each day, getting on my nerves in the end. You're pushing my men way too hard. "We're not gonna break through for at least a couple more days. There is absolutely no way to make it on schedule." The leader of the pack of sweat cogs comes in.

My wife doesn't need to be kept in this filth any longer. How dare he disrespect my future.  "Well, not with that attitude, you're not." I slice the man's throat, as he falls to the ground, blood flowing on the dirt.

"Now... everyone... let's reach inside and dig... a little deeper, shall we? 'Cause that's the only way you're all making it out of this hole." I hum watching their fear thicken.

Two taps on my shoulder break my gaze from the project. "Oh, Echo. Are these all the recruits?" Skinny, no brains, slim Whitted. These are my soldiers?

"Well, I thought you would want quality over quantity. Not everybody can pass a .38 caliber test of faith." I smirk thinking of the trials and tests they've suffered.  "Yes... you certainly have set a very high bar for devotion."

"Oh. Almost forgot. Bruce Wayne and his sidekick Curls... Or is he the sidekick? Anyway, they tried to infiltrate our little operation here."

"Oh?" " Oh. And Curls can walk, really well, especially... for a paraplegic. Ah. And she wants to kill you." I glare at her with a snarl. This doesn't help that my wife is being cared for in the same building.

"A lot, FYI. If I see her, I'll give you a shout. Oh... and kill her." I nod rolling my eyes. Finish the job and move on for the better of my wife and children.

~

I walk into the GCPD questioning room with my scarf wrapped around my head, and my belly protruding out. Quite the look I must say. I open the door to see Victor Zsasz pushed on to the table by Harvey.

"Ow. This is a really nice table." I snicker and take my glasses off. "You do realize her thrives on the pain." The three pairs of eyes look at me.  "We got a dozen witnesses that saw you walk out of that building before it went kabooey."

"Yeah. I heard some gangs had taken over." Zsasz says turning his eyes to me.  "Figured, with you guys occupied, I might help myself to some of your supplies. Hey, do you guys have any canned peaches? Man, I'd trade an arm and a leg for that right now. Not mine, somebody else's. Maybe little baby Maniax's." He laughs reaching for my stomach before Jim swats his arm down.

"If you're innocent, why shoot up a city block full of cops?"

"Because it was full of cops." Zsasz and I say at the same time.

"Who were also trying to shoot me. And, guys, those were warning shots. I mean, if I really

wanted to kill you... you'd be dead. You got a pen? I want to write this guy a thank-you letter. Do the math. If I blew up a building full of people, I would have covered

every inch of my body in sweet, sweet scars. Mrs. Valeska...  want to do a strip search?" He winks before my father punches him. "She's married, pig."

I lock arms with my dad and walk through the station. "Got Lucius on the horn for you, Cap."

"Lucius, talk to me." I grab the phone holding it close enough for the both of us to hear. "Haven wasn't destroyed by a bomb. It was an RPG, like the one that took down the chopper."

"You sure?"

I'm holding what's left of it in my hand right now. We found pieces of it in the rubble. It was fired through the basement window, detonated the fuel oil tank. And we're still trying to figure out exactly which rooftop it was fired from.

"Rooftop?"

"Yes."

"Dad, the only angle you could hit this place from is above. Zsasz was on the ground. Looks like you need a new suspect. I think we need to-"

"Jim! Ah. I know the wheels of justice turn slowly, so I'm here to provide- a modicum of grease."

Rushing up towards the front, Oswald, the Mayor of fallen Gotham, stands tall and proud.

"You need to leave right now."

"Still claiming he's innocent, is he?"

"Yes. And as much as I hate to admit it, the evidence is backing him up."

Harvey busts out, "What the hell's going on?" "Harvey, according to Lucius, Zsasz couldn't have done it."

Oswald huffs with a smile. "I did not expect you to go soft, Jim. Actually, I did. Behind a grandpa and all must've changed your ways. Which is why I didn't come alone." Several gunmen come out armed and ready to fire. My father huddles me close and shields me from the view of guns.

"Bring me Victor Zsasz!"

"Leave, (Y/n). Go home!" Jim pushes me away towards the doors.

~

Jeremiah POV:

I wave my hat fanning my pale skin placed upon the crippling bones. It's so damp and hot in here, but I'm freezing. My heart has gone cold without her scent around. Not a touch, not a wiff, not a glace for days it seems. Where is my angel with my bundles of joy?

"You see, a river cuts through rock not because of its power, but because of its persistence. So what do we do when we feel like giving up? Dig a little deeper. And what do we do when we can't possibly go on any longer? Dig a little deeper. And what do we..." A sharp blade stabs into my side crippling my speech. I look down seeing the masked figure in the striped coat. I gasp feeling my footing slide as the attacker shoves the blade into my stomach further.

"Deep enough?" The individual removes the mask revealing the little pussy of them all. "Well, Selina, I must say..." She pulls the blade out plunging it back in sharply.

"Don't say anything." Over and over again the blade is shoved into my side. The light dimming, the hot steam hitting my brow, the devilish laughter of my brother. This is near my end? Maybe so...

"Selina!" The rat is stripped away from me causing me to fall to the ground barely clinging to the life of happiness I have.

"Selina!" Bruce Wayne holds the fierce kitty back. "Stop. It's done! It's over."

~

The building is quiet. The entire place is quiet... Not one swing of an ax hitting limestone, making a light clink sound. Not the ring of my husbands voice calling to his men. Not even Echo meeting me at the door with my slippers and milkshake. Something is not right.

"Jeremiah?" I call out as if he could hear me from below. If not him then someone. One of the members at least, but no one came. I proceeded to enter the elevator only to see blood on the buttons and floor. They were having the graduation today, not everyone makes it.

The doors  open to the pool room and I could almost drop to my knees at the smell. Thick scent of blood coating the walls. I walk out of the elevator and down into the pool counting the dead. No Echo or Jeremiah. Good so far.

I make my way down to the tunnels where silence has taken over. Just a simple lone man sitting in a chair. "Where is Jermiah?" I panic pulling my jacket closer. Could he have left me?

"Mrs. Valaska!" "Where is my husband?" "He's off in the tunnels. He's got injured. I'm supposed to take you to him." "Well, go on!" He shuffles his feet in a pace of nervousness, tripping over rocks and pickaxes. "How did he get hurt?" "Someone came in and just stabbed the boss. She was taken away by Bruce Wayne." I feel fire ignite in my blood. Selina and Bruce. What a treat. Trying to kill my husband in my own home.

Down the tunnels I hear him. Groaning in pain as Echo stitches him up. "How could you let this happen?" I shout at her. "She was fast." "And you're supposed to be faster." I glare at her as she cowers at my words.

"Don't stress, darling. It's not good for the babies."

"Jeremiah." I kneel down next to him grabbing his face. "Are you alright?" He places his hands over mine, kissing them each. "I'm still alive. One thing I've still got on my brother. How are you, my love? I'm sorry. You must've been wrecked with worry." Jeremiah pulls me into his lap. I nod with my bottom lip out. "Yes, I was. I was so scared, Jer." He pulls me to him. "Aw my darling. I know. I know."

I shift my weight slightly causing him to jet in a sharp inhale. "Oh, honey. Stitches still sore?" He nods. "Never would have happened if you wore that armor I prepared." Echo hums, causing me to roll my eyes. "That bullet makes you sentimental of the wrong things." I huff out pushing her out of the view.

"Why would you not check who was working? You always do. You're always prepared." Jeremiah places his hand on my cheek again. "I had to let Selina thrust the knife into my flesh at least once. Verisimilitude trumps precaution, you see." "They think you're dead." I think putting everything together.

Echo stands to the side bouncing with information. "What is it?" She giggles jumping on her heels. "All systems go." Jeremiah lifts himself, placing a hand on the small of my back and leading us along behind Echo.

"You could've died." I whisper looking at the dirt. "I didn't." "But you could have, Jeremiah. That's my point. You have two children growing, and soon they'll be out in this world. They need their father. You've kept me safely away, but that won't mean shit if you're not around to protect your children." I move ahead of him in a fit of fire.

A hand grabs my shoulder spinning me around. Jerehimah dips me and pushes our lips together. His grip on my arm and hip so tight, keeping me pulled to him with no fight. He pulls away only an inch, looking at my eyes, looking into the soul. "Now, you may not understand everything I do, but I do it for you and these two kids. I think and I plan for hours. You sit up in the bed resting your feet like I tell you. When you start questioning if I'm going to make it, that's when this will fall apart. You're my darling. You've been mine for thousands of years. Never doubt me, (Y/n)." He places his hands on my stomach and pecks my forehead. "Come along now. We have things to do."

Leading me through the tunnels I start to see less of the dirt and more solid grey rock already formed into tunnels. "Where are we?" Jeremiah giggles pulling me alongside.

"Doctor. I'm hearing good things." Jeremiah says holding in laughter.

What is he up to?

The Doctor nods. "The bandages are ready to come off. Your assistant thought you'd like to see the results." Echo shakes her head in praise like a dog while Jer nods his head. "Indeed, I would."

He turns to me. "You won't want to miss this, (y/n)."

The Doctor unravels the bandages on the individuals faces revealing a profile built from professional lifestyle and diets. This is Thomas and Martha Wayne before my eyes... ALIVE!

"Oh, you two look beautiful." I smile looking down at her pearl necklace. "Down to the very detail with you." Jeremiah kisses my cheek. "I love family reunions, don't you?" "More than Christmas!" I cheer and giggle.

[fruityotterpop]

Splat 2 Charger Tips

This post was inspired by @skyplayssplatoon who recently made some tip posts to help out the community

Control Settings - For chargers, a lower sensitivity is usually better in order to keep your aim steady. My personal settings are -2 for motion control sensitivity and +2 for R stick sensitivity. Just like any weapon, test with different settings to see what works best for you. 

 (Sorry analog stick users, I’m not very experienced with those types of controls, if any charger mains want to give their settings in the replies it would be appreciated)

Aiming TIps - Try to practice aiming in the training room before going into any matches. It doesn’t need to be for very long and you don’t need to hit all your targets, but it helps bring your muscle memory back if you haven't touched a charger in awhile or you’ve been using other weapons. 

- If you have the time, change up your aiming practice in the training room too. Don’t just practice shots while standing still. Shoot while moving, from above, from below, while jumping off of ledges etc. These routines may seem tedious, but the practice will stick over time and will make your aim more consistent. 

- Snapping onto your targets is a useful and flashy method for getting kills. This video is a great example of what snapping looks like. However, for less experienced charger players, it’s a bad habit to pickup early on and can actually hinder your aim if you try to rely on it. 

Survival Tips - Splat 1 veterans will remember right-side peeking. The same logic still applies to Splat 2 and is pretty important when you’re facing other chargers. For those that don’t know, this helpful Splat 1 video by Squidkids will explain,

- A lot of chargers panic when enemies get into shooting distance. This usually results in a lot of panicked shots that don’t do a lotta damage. When players are close, try to calm down and hit the target with 2 semi-charged shots (i forget about this one too, so don’t worry if this doesn’t stick right away)

- Scoped chargers have a 5% increase to their range, but don’t get the ability to hold their charge. They also lose their field of vision when they zoom in. Try not to stay zoomed in for too long, because you may not see any enemies trying to sneak up on you.

- BOMBS. Chargers with bombs are godlike (imo). They’re the most useful and readily available method of keeping enemies away from you when they get too close. A tip @radiogirl15 taught me was to aim the bomb around your feet when you think you’re going to die. You’d be surprised with how many kills you can get when squiddos and octos aren’t expecting it. 

- Don’t be afraid to jump back to spawn. Chargers will find themselves in a pinch more often than not. As you practice, try to learn when to stand your ground and when to fight another day. It doesn’t take much Quick Super Jump to make this effective either. 1 or 2 subs can make a huge difference, try it out sometime!

(Secret tip, try this out in recon mode. Hold Down on the control pad (like you’re saying Booyah!) and quickly press X then A. If you do this correctly, you can superjump back to spawn without even opening up the map! If you want a clearer explanation of this, just ask in the replies or I can setup a video after this post)

Abilities - Similar to settings, abilities are up to player preference. They’re also dependent on what kinda charger you’re playing. There are a ton of chargers in the game now (; ;) so I’ve put the list underneath 

(Also, remember that abilities in Splatoon operate in diminishing returns. Try not to stack more than 1 main and 3 subs of any given ability and give your gear some variety!)

Note: These abilities are just recommendations and are not set in stone. Find out what works best for your own playstyle. Chargers that are empty have the same recommended abilities as their siblings for the same reasons. 

Splat Charger - Ink Saver Main (2 subs can allow you to shoot an extra charged shot from a full ink tank) 

-Ink Saver Sub (BOMBS)

-Ink Recovery Up (Less time in in the ink, more time shooting)

-Swim Speed Up (Helps your survivability, by making you more mobile)

-Quick Super Jump (1-2 subs, i dont wanna be a nag, but i love it)

-Special Charge Up / Special Saver (Mostly used for ranked, Stingray is useful in Rainmaker and Tower Control)

Firefin Splat Charger - 

Special Charge Up / Special Saver (Suction Bomb Rush is good for Splat Zones and Turf War)

Kensa Splat Charger - 

Special Charge Up / Special Saver (Optional for this charger, since Sprinklers helps you get your special really quickly)

Special Power Up (A better replacement for Special Charge Up, 1 main and 3 subs recommended to keep your baller intact in most situations)

Classic Squiffer - Main Power Up (1 main and 2 subs can increase your range to about the same length as a Goo Tuber) 

Swim Speed Up (This charger has the shortest rage out of its class. It benefits from higher mobility to get within distance and run away cause enemies will closer most of the time)

Quick Super Jump

New Squiffer - 

Special Power Up (Use for the same reasons as the Kensa Splat Charger)

Fresh Squiffer - 

Ink Saver Sub (The suction bomb is pretty ink greedy, so some Ink Saver Sub comes in handy) (The other 2 Squiffers have less ink greedy subs so they don’t need the ability as much)

Special Power Up (2 subs to 1 main is recommended because it increases the splash damage from your inkjet shots - makes it easier to land shots basically)

-The 3 Squiffers are pretty flexible and are mostly up to personal preference when it comes to which abilities you want to run

E-liter 4K - Main Power Up (1 main or 1 main and 1 sub is recommended, the increased turf coverage can help build up special quickly too)

Swim Speed Up (Since heavyweight weapons were buffed in patch 4.3.0 it doesn’t take as much swim speed up its weight class) (recommended amount from as few as 2 subs to 1 main 3 subs)

Ink Saver Main (2 subs grants one more fully charged shot with a full ink tank, 1 main grants two more fully charged shots with a full ink tank)

Special Charge Up (When you use your special, your ink tank automatically refills) (Use your specials wisely in order to keep your ink tank in the green)

Ink Resistance Up (With low mobility, this weapon can suffer from being stuck in enemy ink) (1-2 subs is recommended)

Ink Recovery Up (This weapon needs a lottttttt of ink)

Quick Super Jump

Custom E-liter 4K - 

Ink Saver Sub (Optional, but beakons are expensive)

Sub Power Up (Help your teammates out by getting them to your beakons faster) (If they use your beakons lol)

Special Power Up (Patch 4.6.0 buffed special up for bubbles so you don’t need as much) (2 subs to 1 main of special power up is recommended) 

Bamboozler 14 Mk I - Main Power Up (2 mains and 7 subs / or 3 mains and 4 subs will get you to the damage cap of 99.9 damage)

Ink Saver Sub (The curling bomb is a useful mobility option and if you hold the bomb it can make a great defensive option)

Ink Resistance Up (The bamboozler is the only charger that doesn’t make complete lines of ink when it isn’t fully charged) (You’re bound to get stuck sometime so this ability comes in handy)

Quick Super Jump

Bamboozler 14 Mk II - 

Ink Saver Sub (The sub isn’t as threatening or ink greedy so not highly recommended for this version)

Bamboozler 14 Mk III - 

Special Power Up (Like the Custom E-liter, use it to increase the size and damge radius of your bubbles)

Goo Tuber - Special Charge Up (Splashdown is a good panic special that can take enemies by surprise when they get too close) (Having the special more often helps especially)

Ink Saver Sub (Gee suction bomb! Why do you get 70% of the ink tank?)

Swim Speed Up (With more time to hold a charge, having more speed grants you more opportunities to utilize this unique ability)

Quick Super Jump

Custom Goo Tuber - 

Special Power Up (Same with the New Squiffer, helps with the inkjet)

Scoped Variants -  Same recommended abilities as their unscoped variants. 

[centuryassociates]

Top Five Things to Know if You’re Building Your Cannabis Empire Through M&A

It’s no secret that multiple state-by-state operators are building their cannabis empires through aggressive mergers and acquisitions (“M&A”). Last year, our cannabis business attorneys closed more than $100 million in cannabis company acquisitions, and that shows no signs of stopping in 2019. Cannabis M&A is not your run-of-the-mill business dealing though, and working from boilerplate, rote M&A documents is hugely dangerous. In addition, diligence is oftentimes like a regulatory spiderweb laden with liabilities that other businesses do not face. In addition, the barriers to entry in the cannabis industry are increasingly high, tedious, and protectionist, which can really torture business deals. So, if you find yourself turning into a larger multi-state operator though acquiring cannabis businesses, below are the top five things you need to know.

1. Barriers to Entry

Every state is different in how it treats would-be cannabis licensees. And the differences between states are compounded by whether the state is medicinal, adult-use, low-CBD/high-THC, or all of the above. This translates into not everyone being eligible to own cannabis businesses. And these barriers to entry may include some or all of the following: residency requirements, local control elements that vary by city and county, liquidity standards, background checks, and invasive disclosures of personal information and past conduct in business and industry. Any prospective cannabis business purchaser needs to ensure that they meet all requirements for incoming owners before even contemplating a business purchase and expending time and hours negotiating a deal that may be legally impossible. Note also that localities are increasingly implementing their own barriers to entry (like local residency, past white collar crimes and civil infractions that bar ownership, and license caps), so don’t ignore the applicable municipal code standards either.

2.  Closing Can Be Chaos.

Most if not all states will tell cannabis businesses to report to them when new owners or parties of interest come into the picture. Why? Because of the federal enforcement priorities stemming from the now rescinded Cole Memo, every state must know exactly who is in control of/financing its cannabis licensees. Turning to M&A, every acquisition agreement has pre- and post-closing conditions and cannabis is no different. However, depending on the state or even the city or county in which the cannabis business operates, and due to new owner reporting requirements, conditions to and after closing will vary wildly. Ultimately, they will depend on whether state and local regulators demand that incoming owners close on business interests first so that they may be vetted and checked in that capacity, or they will depend on whether regulators must first examine the purchase agreement, approve the new owners prior to closing, and only then the new owners can take over. This is a very good reason why a one-size fits all boilerplate acquisition agreement is not going to work for your cannabis acquisitions. So, be sure to check what the subject state/locals require when it comes to closing.

3.  Diligence may be a Mess. 

The regulatory histories of most cannabis businesses are likely going to be chalk-full of various entitlements that enable the business to operate. And where cannabis remains federally illegal, a good amount of cannabis businesses are still operating on an all-cash basis and all of them are dealing with 280E. The diligence on these businesses then is usually more intense than other businesses. Would-be buyers need to exercise extreme care when vetting a cannabis business to look for ticking time bombs that surround state licensing compliance, local licensing compliance (which will be different depending on the local government), tax reporting (federal, state, and local) and specifically compliance with 280E (which can be a disaster). See here and here for how a cannabis business should prepare itself to sell. Also, if you’re buying a cannabis business that was operative under older, less restrictive regulations, you may face a situation where there’s little to no diligence at all because no records were kept and everything was done in cash (see Los Angeles for example).

4.  Valuations are All Over the Place. 

Pretty much every cannabis market in the U.S. is still emerging because they’re silo’ed marketplaces designed by state governments that continue to change as industry issues arise. Plus, the oldest regulated cannabis markets are Washington and Colorado (they’re only around 6 years old), which still doesn’t give us a ton of market data or operational history to properly value the businesses therein or in other states. Without a doubt, just having a cannabis license is valuable, but when a business is pre-revenue with, let’s say, a build-out ahead of it to satisfy local laws with constantly evolving state and local cannabis regulations in what will be a potentially saturated market in a couple of years, it’s really hard to say what the right valuation is. That hasn’t stopped certain cannabis businesses selling for pretty large sums though just based on the momentum of legalization and the prospect of market demand.

5.  You’ve Probably Already Violated State and Local Law. 

I cannot tell you the number of acquisitions our firm has seen after-the-fact where the parties violated state and local law from the outset of the agreement. Many folks don’t realize that, on the whole, state cannabis licenses are not transferable, so they cannot be individually bought and sold. You actually have to buy the company that holds the licenses (and all of its assets and liabilities). In addition, in most if not all states, you can’t separate licenses out from a vertically integrated company in order to sell them. And on average you can’t sell local entitlements either without them becoming void. There are also typically strict timing requirements in reporting acquisitions to both state and local regulators and parties usually violate those out of the gate because they’re either not aware or they don’t think that the reporting requirement applies to them. And if you take control of a cannabis business and do not tell regulators, your license is going to be in hot water. Specifically regarding the locals, if you’re dealing with a development agreement or other specific entitlement, assignment isn’t going to be freely allowed. The majority of the time, to get by the locals you not only have to ask for permission, you may even have to have a hearing in front of the City Council or Planning Commission to take over the entitlement. In certain states, taking over a cannabis business may even require cessation of the business and a new license application while the new owners are checked out. For the unwary or reckless buyer who may not know or care about the intensity of the regulations faced by cannabis businesses, their entire acquisition agreement may be completely illegal and grounds for license cancellation.

It’s only a matter of time before regulators begin investigating the nature of cannabis acquisitions to ensure that the transaction complied with applicable regulations. So, err on the safe side and make sure you know the regulations and your eligibility so that due diligence is smooth and compliance is less painful, and so that you don’t waste time and money on an illegal transaction.

Top Five Things to Know if You’re Building Your Cannabis Empire Through M&A posted first on https://centuryassociates.blogspot.com/

[centuryassociates]

Top Five Things to Know if You’re Building Your Cannabis Empire Through M&A

It’s no secret that multiple state-by-state operators are building their cannabis empires through aggressive mergers and acquisitions (“M&A”). Last year, our cannabis business attorneys closed more than $100 million in cannabis company acquisitions, and that shows no signs of stopping in 2019. Cannabis M&A is not your run-of-the-mill business dealing though, and working from boilerplate, rote M&A documents is hugely dangerous. In addition, diligence is oftentimes like a regulatory spiderweb laden with liabilities that other businesses do not face. In addition, the barriers to entry in the cannabis industry are increasingly high, tedious, and protectionist, which can really torture business deals. So, if you find yourself turning into a larger multi-state operator though acquiring cannabis businesses, below are the top five things you need to know.

1. Barriers to Entry

Every state is different in how it treats would-be cannabis licensees. And the differences between states are compounded by whether the state is medicinal, adult-use, low-CBD/high-THC, or all of the above. This translates into not everyone being eligible to own cannabis businesses. And these barriers to entry may include some or all of the following: residency requirements, local control elements that vary by city and county, liquidity standards, background checks, and invasive disclosures of personal information and past conduct in business and industry. Any prospective cannabis business purchaser needs to ensure that they meet all requirements for incoming owners before even contemplating a business purchase and expending time and hours negotiating a deal that may be legally impossible. Note also that localities are increasingly implementing their own barriers to entry (like local residency, past white collar crimes and civil infractions that bar ownership, and license caps), so don’t ignore the applicable municipal code standards either.

2.  Closing Can Be Chaos.

Most if not all states will tell cannabis businesses to report to them when new owners or parties of interest come into the picture. Why? Because of the federal enforcement priorities stemming from the now rescinded Cole Memo, every state must know exactly who is in control of/financing its cannabis licensees. Turning to M&A, every acquisition agreement has pre- and post-closing conditions and cannabis is no different. However, depending on the state or even the city or county in which the cannabis business operates, and due to new owner reporting requirements, conditions to and after closing will vary wildly. Ultimately, they will depend on whether state and local regulators demand that incoming owners close on business interests first so that they may be vetted and checked in that capacity, or they will depend on whether regulators must first examine the purchase agreement, approve the new owners prior to closing, and only then the new owners can take over. This is a very good reason why a one-size fits all boilerplate acquisition agreement is not going to work for your cannabis acquisitions. So, be sure to check what the subject state/locals require when it comes to closing.

3.  Diligence may be a Mess. 

The regulatory histories of most cannabis businesses are likely going to be chalk-full of various entitlements that enable the business to operate. And where cannabis remains federally illegal, a good amount of cannabis businesses are still operating on an all-cash basis and all of them are dealing with 280E. The diligence on these businesses then is usually more intense than other businesses. Would-be buyers need to exercise extreme care when vetting a cannabis business to look for ticking time bombs that surround state licensing compliance, local licensing compliance (which will be different depending on the local government), tax reporting (federal, state, and local) and specifically compliance with 280E (which can be a disaster). See here and here for how a cannabis business should prepare itself to sell. Also, if you’re buying a cannabis business that was operative under older, less restrictive regulations, you may face a situation where there’s little to no diligence at all because no records were kept and everything was done in cash (see Los Angeles for example).

4.  Valuations are All Over the Place. 

Pretty much every cannabis market in the U.S. is still emerging because they’re silo’ed marketplaces designed by state governments that continue to change as industry issues arise. Plus, the oldest regulated cannabis markets are Washington and Colorado (they’re only around 6 years old), which still doesn’t give us a ton of market data or operational history to properly value the businesses therein or in other states. Without a doubt, just having a cannabis license is valuable, but when a business is pre-revenue with, let’s say, a build-out ahead of it to satisfy local laws with constantly evolving state and local cannabis regulations in what will be a potentially saturated market in a couple of years, it’s really hard to say what the right valuation is. That hasn’t stopped certain cannabis businesses selling for pretty large sums though just based on the momentum of legalization and the prospect of market demand.

5.  You’ve Probably Already Violated State and Local Law. 

I cannot tell you the number of acquisitions our firm has seen after-the-fact where the parties violated state and local law from the outset of the agreement. Many folks don’t realize that, on the whole, state cannabis licenses are not transferable, so they cannot be individually bought and sold. You actually have to buy the company that holds the licenses (and all of its assets and liabilities). In addition, in most if not all states, you can’t separate licenses out from a vertically integrated company in order to sell them. And on average you can’t sell local entitlements either without them becoming void. There are also typically strict timing requirements in reporting acquisitions to both state and local regulators and parties usually violate those out of the gate because they’re either not aware or they don’t think that the reporting requirement applies to them. And if you take control of a cannabis business and do not tell regulators, your license is going to be in hot water. Specifically regarding the locals, if you’re dealing with a development agreement or other specific entitlement, assignment isn’t going to be freely allowed. The majority of the time, to get by the locals you not only have to ask for permission, you may even have to have a hearing in front of the City Council or Planning Commission to take over the entitlement. In certain states, taking over a cannabis business may even require cessation of the business and a new license application while the new owners are checked out. For the unwary or reckless buyer who may not know or care about the intensity of the regulations faced by cannabis businesses, their entire acquisition agreement may be completely illegal and grounds for license cancellation.

It’s only a matter of time before regulators begin investigating the nature of cannabis acquisitions to ensure that the transaction complied with applicable regulations. So, err on the safe side and make sure you know the regulations and your eligibility so that due diligence is smooth and compliance is less painful, and so that you don’t waste time and money on an illegal transaction.

Top Five Things to Know if You’re Building Your Cannabis Empire Through M&A posted first on https://centuryassociates.blogspot.com/

[centuryassociates]

Top Five Things to Know if You’re Building Your Cannabis Empire Through M&A

It’s no secret that multiple state-by-state operators are building their cannabis empires through aggressive mergers and acquisitions (“M&A”). Last year, our cannabis business attorneys closed more than $100 million in cannabis company acquisitions, and that shows no signs of stopping in 2019. Cannabis M&A is not your run-of-the-mill business dealing though, and working from boilerplate, rote M&A documents is hugely dangerous. In addition, diligence is oftentimes like a regulatory spiderweb laden with liabilities that other businesses do not face. In addition, the barriers to entry in the cannabis industry are increasingly high, tedious, and protectionist, which can really torture business deals. So, if you find yourself turning into a larger multi-state operator though acquiring cannabis businesses, below are the top five things you need to know.

1. Barriers to Entry

Every state is different in how it treats would-be cannabis licensees. And the differences between states are compounded by whether the state is medicinal, adult-use, low-CBD/high-THC, or all of the above. This translates into not everyone being eligible to own cannabis businesses. And these barriers to entry may include some or all of the following: residency requirements, local control elements that vary by city and county, liquidity standards, background checks, and invasive disclosures of personal information and past conduct in business and industry. Any prospective cannabis business purchaser needs to ensure that they meet all requirements for incoming owners before even contemplating a business purchase and expending time and hours negotiating a deal that may be legally impossible. Note also that localities are increasingly implementing their own barriers to entry (like local residency, past white collar crimes and civil infractions that bar ownership, and license caps), so don’t ignore the applicable municipal code standards either.

2.  Closing Can Be Chaos.

Most if not all states will tell cannabis businesses to report to them when new owners or parties of interest come into the picture. Why? Because of the federal enforcement priorities stemming from the now rescinded Cole Memo, every state must know exactly who is in control of/financing its cannabis licensees. Turning to M&A, every acquisition agreement has pre- and post-closing conditions and cannabis is no different. However, depending on the state or even the city or county in which the cannabis business operates, and due to new owner reporting requirements, conditions to and after closing will vary wildly. Ultimately, they will depend on whether state and local regulators demand that incoming owners close on business interests first so that they may be vetted and checked in that capacity, or they will depend on whether regulators must first examine the purchase agreement, approve the new owners prior to closing, and only then the new owners can take over. This is a very good reason why a one-size fits all boilerplate acquisition agreement is not going to work for your cannabis acquisitions. So, be sure to check what the subject state/locals require when it comes to closing.

3.  Diligence may be a Mess. 

The regulatory histories of most cannabis businesses are likely going to be chalk-full of various entitlements that enable the business to operate. And where cannabis remains federally illegal, a good amount of cannabis businesses are still operating on an all-cash basis and all of them are dealing with 280E. The diligence on these businesses then is usually more intense than other businesses. Would-be buyers need to exercise extreme care when vetting a cannabis business to look for ticking time bombs that surround state licensing compliance, local licensing compliance (which will be different depending on the local government), tax reporting (federal, state, and local) and specifically compliance with 280E (which can be a disaster). See here and here for how a cannabis business should prepare itself to sell. Also, if you’re buying a cannabis business that was operative under older, less restrictive regulations, you may face a situation where there’s little to no diligence at all because no records were kept and everything was done in cash (see Los Angeles for example).

4.  Valuations are All Over the Place. 

Pretty much every cannabis market in the U.S. is still emerging because they’re silo’ed marketplaces designed by state governments that continue to change as industry issues arise. Plus, the oldest regulated cannabis markets are Washington and Colorado (they’re only around 6 years old), which still doesn’t give us a ton of market data or operational history to properly value the businesses therein or in other states. Without a doubt, just having a cannabis license is valuable, but when a business is pre-revenue with, let’s say, a build-out ahead of it to satisfy local laws with constantly evolving state and local cannabis regulations in what will be a potentially saturated market in a couple of years, it’s really hard to say what the right valuation is. That hasn’t stopped certain cannabis businesses selling for pretty large sums though just based on the momentum of legalization and the prospect of market demand.

5.  You’ve Probably Already Violated State and Local Law. 

I cannot tell you the number of acquisitions our firm has seen after-the-fact where the parties violated state and local law from the outset of the agreement. Many folks don’t realize that, on the whole, state cannabis licenses are not transferable, so they cannot be individually bought and sold. You actually have to buy the company that holds the licenses (and all of its assets and liabilities). In addition, in most if not all states, you can’t separate licenses out from a vertically integrated company in order to sell them. And on average you can’t sell local entitlements either without them becoming void. There are also typically strict timing requirements in reporting acquisitions to both state and local regulators and parties usually violate those out of the gate because they’re either not aware or they don’t think that the reporting requirement applies to them. And if you take control of a cannabis business and do not tell regulators, your license is going to be in hot water. Specifically regarding the locals, if you’re dealing with a development agreement or other specific entitlement, assignment isn’t going to be freely allowed. The majority of the time, to get by the locals you not only have to ask for permission, you may even have to have a hearing in front of the City Council or Planning Commission to take over the entitlement. In certain states, taking over a cannabis business may even require cessation of the business and a new license application while the new owners are checked out. For the unwary or reckless buyer who may not know or care about the intensity of the regulations faced by cannabis businesses, their entire acquisition agreement may be completely illegal and grounds for license cancellation.

It’s only a matter of time before regulators begin investigating the nature of cannabis acquisitions to ensure that the transaction complied with applicable regulations. So, err on the safe side and make sure you know the regulations and your eligibility so that due diligence is smooth and compliance is less painful, and so that you don’t waste time and money on an illegal transaction.

Top Five Things to Know if You’re Building Your Cannabis Empire Through M&A posted first on https://centuryassociates.blogspot.com/

[centuryassociates]

Top Five Things to Know if You’re Building Your Cannabis Empire Through M&A

It’s no secret that multiple state-by-state operators are building their cannabis empires through aggressive mergers and acquisitions (“M&A”). Last year, our cannabis business attorneys closed more than $100 million in cannabis company acquisitions, and that shows no signs of stopping in 2019. Cannabis M&A is not your run-of-the-mill business dealing though, and working from boilerplate, rote M&A documents is hugely dangerous. In addition, diligence is oftentimes like a regulatory spiderweb laden with liabilities that other businesses do not face. In addition, the barriers to entry in the cannabis industry are increasingly high, tedious, and protectionist, which can really torture business deals. So, if you find yourself turning into a larger multi-state operator though acquiring cannabis businesses, below are the top five things you need to know.

1. Barriers to Entry

Every state is different in how it treats would-be cannabis licensees. And the differences between states are compounded by whether the state is medicinal, adult-use, low-CBD/high-THC, or all of the above. This translates into not everyone being eligible to own cannabis businesses. And these barriers to entry may include some or all of the following: residency requirements, local control elements that vary by city and county, liquidity standards, background checks, and invasive disclosures of personal information and past conduct in business and industry. Any prospective cannabis business purchaser needs to ensure that they meet all requirements for incoming owners before even contemplating a business purchase and expending time and hours negotiating a deal that may be legally impossible. Note also that localities are increasingly implementing their own barriers to entry (like local residency, past white collar crimes and civil infractions that bar ownership, and license caps), so don’t ignore the applicable municipal code standards either.

2.  Closing Can Be Chaos.

Most if not all states will tell cannabis businesses to report to them when new owners or parties of interest come into the picture. Why? Because of the federal enforcement priorities stemming from the now rescinded Cole Memo, every state must know exactly who is in control of/financing its cannabis licensees. Turning to M&A, every acquisition agreement has pre- and post-closing conditions and cannabis is no different. However, depending on the state or even the city or county in which the cannabis business operates, and due to new owner reporting requirements, conditions to and after closing will vary wildly. Ultimately, they will depend on whether state and local regulators demand that incoming owners close on business interests first so that they may be vetted and checked in that capacity, or they will depend on whether regulators must first examine the purchase agreement, approve the new owners prior to closing, and only then the new owners can take over. This is a very good reason why a one-size fits all boilerplate acquisition agreement is not going to work for your cannabis acquisitions. So, be sure to check what the subject state/locals require when it comes to closing.

3.  Diligence may be a Mess. 

The regulatory histories of most cannabis businesses are likely going to be chalk-full of various entitlements that enable the business to operate. And where cannabis remains federally illegal, a good amount of cannabis businesses are still operating on an all-cash basis and all of them are dealing with 280E. The diligence on these businesses then is usually more intense than other businesses. Would-be buyers need to exercise extreme care when vetting a cannabis business to look for ticking time bombs that surround state licensing compliance, local licensing compliance (which will be different depending on the local government), tax reporting (federal, state, and local) and specifically compliance with 280E (which can be a disaster). See here and here for how a cannabis business should prepare itself to sell. Also, if you’re buying a cannabis business that was operative under older, less restrictive regulations, you may face a situation where there’s little to no diligence at all because no records were kept and everything was done in cash (see Los Angeles for example).

4.  Valuations are All Over the Place. 

Pretty much every cannabis market in the U.S. is still emerging because they’re silo’ed marketplaces designed by state governments that continue to change as industry issues arise. Plus, the oldest regulated cannabis markets are Washington and Colorado (they’re only around 6 years old), which still doesn’t give us a ton of market data or operational history to properly value the businesses therein or in other states. Without a doubt, just having a cannabis license is valuable, but when a business is pre-revenue with, let’s say, a build-out ahead of it to satisfy local laws with constantly evolving state and local cannabis regulations in what will be a potentially saturated market in a couple of years, it’s really hard to say what the right valuation is. That hasn’t stopped certain cannabis businesses selling for pretty large sums though just based on the momentum of legalization and the prospect of market demand.

5.  You’ve Probably Already Violated State and Local Law. 

I cannot tell you the number of acquisitions our firm has seen after-the-fact where the parties violated state and local law from the outset of the agreement. Many folks don’t realize that, on the whole, state cannabis licenses are not transferable, so they cannot be individually bought and sold. You actually have to buy the company that holds the licenses (and all of its assets and liabilities). In addition, in most if not all states, you can’t separate licenses out from a vertically integrated company in order to sell them. And on average you can’t sell local entitlements either without them becoming void. There are also typically strict timing requirements in reporting acquisitions to both state and local regulators and parties usually violate those out of the gate because they’re either not aware or they don’t think that the reporting requirement applies to them. And if you take control of a cannabis business and do not tell regulators, your license is going to be in hot water. Specifically regarding the locals, if you’re dealing with a development agreement or other specific entitlement, assignment isn’t going to be freely allowed. The majority of the time, to get by the locals you not only have to ask for permission, you may even have to have a hearing in front of the City Council or Planning Commission to take over the entitlement. In certain states, taking over a cannabis business may even require cessation of the business and a new license application while the new owners are checked out. For the unwary or reckless buyer who may not know or care about the intensity of the regulations faced by cannabis businesses, their entire acquisition agreement may be completely illegal and grounds for license cancellation.

It’s only a matter of time before regulators begin investigating the nature of cannabis acquisitions to ensure that the transaction complied with applicable regulations. So, err on the safe side and make sure you know the regulations and your eligibility so that due diligence is smooth and compliance is less painful, and so that you don’t waste time and money on an illegal transaction.

Top Five Things to Know if You’re Building Your Cannabis Empire Through M&A posted first on https://centuryassociates.blogspot.com/

[centuryassociates]

Top Five Things to Know if You’re Building Your Cannabis Empire Through M&A

It’s no secret that multiple state-by-state operators are building their cannabis empires through aggressive mergers and acquisitions (“M&A”). Last year, our cannabis business attorneys closed more than $100 million in cannabis company acquisitions, and that shows no signs of stopping in 2019. Cannabis M&A is not your run-of-the-mill business dealing though, and working from boilerplate, rote M&A documents is hugely dangerous. In addition, diligence is oftentimes like a regulatory spiderweb laden with liabilities that other businesses do not face. In addition, the barriers to entry in the cannabis industry are increasingly high, tedious, and protectionist, which can really torture business deals. So, if you find yourself turning into a larger multi-state operator though acquiring cannabis businesses, below are the top five things you need to know.

1. Barriers to Entry

Every state is different in how it treats would-be cannabis licensees. And the differences between states are compounded by whether the state is medicinal, adult-use, low-CBD/high-THC, or all of the above. This translates into not everyone being eligible to own cannabis businesses. And these barriers to entry may include some or all of the following: residency requirements, local control elements that vary by city and county, liquidity standards, background checks, and invasive disclosures of personal information and past conduct in business and industry. Any prospective cannabis business purchaser needs to ensure that they meet all requirements for incoming owners before even contemplating a business purchase and expending time and hours negotiating a deal that may be legally impossible. Note also that localities are increasingly implementing their own barriers to entry (like local residency, past white collar crimes and civil infractions that bar ownership, and license caps), so don’t ignore the applicable municipal code standards either.

2.  Closing Can Be Chaos.

Most if not all states will tell cannabis businesses to report to them when new owners or parties of interest come into the picture. Why? Because of the federal enforcement priorities stemming from the now rescinded Cole Memo, every state must know exactly who is in control of/financing its cannabis licensees. Turning to M&A, every acquisition agreement has pre- and post-closing conditions and cannabis is no different. However, depending on the state or even the city or county in which the cannabis business operates, and due to new owner reporting requirements, conditions to and after closing will vary wildly. Ultimately, they will depend on whether state and local regulators demand that incoming owners close on business interests first so that they may be vetted and checked in that capacity, or they will depend on whether regulators must first examine the purchase agreement, approve the new owners prior to closing, and only then the new owners can take over. This is a very good reason why a one-size fits all boilerplate acquisition agreement is not going to work for your cannabis acquisitions. So, be sure to check what the subject state/locals require when it comes to closing.

3.  Diligence may be a Mess. 

The regulatory histories of most cannabis businesses are likely going to be chalk-full of various entitlements that enable the business to operate. And where cannabis remains federally illegal, a good amount of cannabis businesses are still operating on an all-cash basis and all of them are dealing with 280E. The diligence on these businesses then is usually more intense than other businesses. Would-be buyers need to exercise extreme care when vetting a cannabis business to look for ticking time bombs that surround state licensing compliance, local licensing compliance (which will be different depending on the local government), tax reporting (federal, state, and local) and specifically compliance with 280E (which can be a disaster). See here and here for how a cannabis business should prepare itself to sell. Also, if you’re buying a cannabis business that was operative under older, less restrictive regulations, you may face a situation where there’s little to no diligence at all because no records were kept and everything was done in cash (see Los Angeles for example).

4.  Valuations are All Over the Place. 

Pretty much every cannabis market in the U.S. is still emerging because they’re silo’ed marketplaces designed by state governments that continue to change as industry issues arise. Plus, the oldest regulated cannabis markets are Washington and Colorado (they’re only around 6 years old), which still doesn’t give us a ton of market data or operational history to properly value the businesses therein or in other states. Without a doubt, just having a cannabis license is valuable, but when a business is pre-revenue with, let’s say, a build-out ahead of it to satisfy local laws with constantly evolving state and local cannabis regulations in what will be a potentially saturated market in a couple of years, it’s really hard to say what the right valuation is. That hasn’t stopped certain cannabis businesses selling for pretty large sums though just based on the momentum of legalization and the prospect of market demand.

5.  You’ve Probably Already Violated State and Local Law. 

I cannot tell you the number of acquisitions our firm has seen after-the-fact where the parties violated state and local law from the outset of the agreement. Many folks don’t realize that, on the whole, state cannabis licenses are not transferable, so they cannot be individually bought and sold. You actually have to buy the company that holds the licenses (and all of its assets and liabilities). In addition, in most if not all states, you can’t separate licenses out from a vertically integrated company in order to sell them. And on average you can’t sell local entitlements either without them becoming void. There are also typically strict timing requirements in reporting acquisitions to both state and local regulators and parties usually violate those out of the gate because they’re either not aware or they don’t think that the reporting requirement applies to them. And if you take control of a cannabis business and do not tell regulators, your license is going to be in hot water. Specifically regarding the locals, if you’re dealing with a development agreement or other specific entitlement, assignment isn’t going to be freely allowed. The majority of the time, to get by the locals you not only have to ask for permission, you may even have to have a hearing in front of the City Council or Planning Commission to take over the entitlement. In certain states, taking over a cannabis business may even require cessation of the business and a new license application while the new owners are checked out. For the unwary or reckless buyer who may not know or care about the intensity of the regulations faced by cannabis businesses, their entire acquisition agreement may be completely illegal and grounds for license cancellation.

It’s only a matter of time before regulators begin investigating the nature of cannabis acquisitions to ensure that the transaction complied with applicable regulations. So, err on the safe side and make sure you know the regulations and your eligibility so that due diligence is smooth and compliance is less painful, and so that you don’t waste time and money on an illegal transaction.

Top Five Things to Know if You’re Building Your Cannabis Empire Through M&A posted first on https://centuryassociates.blogspot.com/

[centuryassociates]

Top Five Things to Know if You’re Building Your Cannabis Empire Through M&A

It’s no secret that multiple state-by-state operators are building their cannabis empires through aggressive mergers and acquisitions (“M&A”). Last year, our cannabis business attorneys closed more than $100 million in cannabis company acquisitions, and that shows no signs of stopping in 2019. Cannabis M&A is not your run-of-the-mill business dealing though, and working from boilerplate, rote M&A documents is hugely dangerous. In addition, diligence is oftentimes like a regulatory spiderweb laden with liabilities that other businesses do not face. In addition, the barriers to entry in the cannabis industry are increasingly high, tedious, and protectionist, which can really torture business deals. So, if you find yourself turning into a larger multi-state operator though acquiring cannabis businesses, below are the top five things you need to know.

1. Barriers to Entry

Every state is different in how it treats would-be cannabis licensees. And the differences between states are compounded by whether the state is medicinal, adult-use, low-CBD/high-THC, or all of the above. This translates into not everyone being eligible to own cannabis businesses. And these barriers to entry may include some or all of the following: residency requirements, local control elements that vary by city and county, liquidity standards, background checks, and invasive disclosures of personal information and past conduct in business and industry. Any prospective cannabis business purchaser needs to ensure that they meet all requirements for incoming owners before even contemplating a business purchase and expending time and hours negotiating a deal that may be legally impossible. Note also that localities are increasingly implementing their own barriers to entry (like local residency, past white collar crimes and civil infractions that bar ownership, and license caps), so don’t ignore the applicable municipal code standards either.

2.  Closing Can Be Chaos.

Most if not all states will tell cannabis businesses to report to them when new owners or parties of interest come into the picture. Why? Because of the federal enforcement priorities stemming from the now rescinded Cole Memo, every state must know exactly who is in control of/financing its cannabis licensees. Turning to M&A, every acquisition agreement has pre- and post-closing conditions and cannabis is no different. However, depending on the state or even the city or county in which the cannabis business operates, and due to new owner reporting requirements, conditions to and after closing will vary wildly. Ultimately, they will depend on whether state and local regulators demand that incoming owners close on business interests first so that they may be vetted and checked in that capacity, or they will depend on whether regulators must first examine the purchase agreement, approve the new owners prior to closing, and only then the new owners can take over. This is a very good reason why a one-size fits all boilerplate acquisition agreement is not going to work for your cannabis acquisitions. So, be sure to check what the subject state/locals require when it comes to closing.

3.  Diligence may be a Mess. 

The regulatory histories of most cannabis businesses are likely going to be chalk-full of various entitlements that enable the business to operate. And where cannabis remains federally illegal, a good amount of cannabis businesses are still operating on an all-cash basis and all of them are dealing with 280E. The diligence on these businesses then is usually more intense than other businesses. Would-be buyers need to exercise extreme care when vetting a cannabis business to look for ticking time bombs that surround state licensing compliance, local licensing compliance (which will be different depending on the local government), tax reporting (federal, state, and local) and specifically compliance with 280E (which can be a disaster). See here and here for how a cannabis business should prepare itself to sell. Also, if you’re buying a cannabis business that was operative under older, less restrictive regulations, you may face a situation where there’s little to no diligence at all because no records were kept and everything was done in cash (see Los Angeles for example).

4.  Valuations are All Over the Place. 

Pretty much every cannabis market in the U.S. is still emerging because they’re silo’ed marketplaces designed by state governments that continue to change as industry issues arise. Plus, the oldest regulated cannabis markets are Washington and Colorado (they’re only around 6 years old), which still doesn’t give us a ton of market data or operational history to properly value the businesses therein or in other states. Without a doubt, just having a cannabis license is valuable, but when a business is pre-revenue with, let’s say, a build-out ahead of it to satisfy local laws with constantly evolving state and local cannabis regulations in what will be a potentially saturated market in a couple of years, it’s really hard to say what the right valuation is. That hasn’t stopped certain cannabis businesses selling for pretty large sums though just based on the momentum of legalization and the prospect of market demand.

5.  You’ve Probably Already Violated State and Local Law. 

I cannot tell you the number of acquisitions our firm has seen after-the-fact where the parties violated state and local law from the outset of the agreement. Many folks don’t realize that, on the whole, state cannabis licenses are not transferable, so they cannot be individually bought and sold. You actually have to buy the company that holds the licenses (and all of its assets and liabilities). In addition, in most if not all states, you can’t separate licenses out from a vertically integrated company in order to sell them. And on average you can’t sell local entitlements either without them becoming void. There are also typically strict timing requirements in reporting acquisitions to both state and local regulators and parties usually violate those out of the gate because they’re either not aware or they don’t think that the reporting requirement applies to them. And if you take control of a cannabis business and do not tell regulators, your license is going to be in hot water. Specifically regarding the locals, if you’re dealing with a development agreement or other specific entitlement, assignment isn’t going to be freely allowed. The majority of the time, to get by the locals you not only have to ask for permission, you may even have to have a hearing in front of the City Council or Planning Commission to take over the entitlement. In certain states, taking over a cannabis business may even require cessation of the business and a new license application while the new owners are checked out. For the unwary or reckless buyer who may not know or care about the intensity of the regulations faced by cannabis businesses, their entire acquisition agreement may be completely illegal and grounds for license cancellation.

It’s only a matter of time before regulators begin investigating the nature of cannabis acquisitions to ensure that the transaction complied with applicable regulations. So, err on the safe side and make sure you know the regulations and your eligibility so that due diligence is smooth and compliance is less painful, and so that you don’t waste time and money on an illegal transaction.

Top Five Things to Know if You’re Building Your Cannabis Empire Through M&A posted first on https://centuryassociates.blogspot.com/

[centuryassociates]

Top Five Things to Know if You’re Building Your Cannabis Empire Through M&A

It’s no secret that multiple state-by-state operators are building their cannabis empires through aggressive mergers and acquisitions (“M&A”). Last year, our cannabis business attorneys closed more than $100 million in cannabis company acquisitions, and that shows no signs of stopping in 2019. Cannabis M&A is not your run-of-the-mill business dealing though, and working from boilerplate, rote M&A documents is hugely dangerous. In addition, diligence is oftentimes like a regulatory spiderweb laden with liabilities that other businesses do not face. In addition, the barriers to entry in the cannabis industry are increasingly high, tedious, and protectionist, which can really torture business deals. So, if you find yourself turning into a larger multi-state operator though acquiring cannabis businesses, below are the top five things you need to know.

1. Barriers to Entry

Every state is different in how it treats would-be cannabis licensees. And the differences between states are compounded by whether the state is medicinal, adult-use, low-CBD/high-THC, or all of the above. This translates into not everyone being eligible to own cannabis businesses. And these barriers to entry may include some or all of the following: residency requirements, local control elements that vary by city and county, liquidity standards, background checks, and invasive disclosures of personal information and past conduct in business and industry. Any prospective cannabis business purchaser needs to ensure that they meet all requirements for incoming owners before even contemplating a business purchase and expending time and hours negotiating a deal that may be legally impossible. Note also that localities are increasingly implementing their own barriers to entry (like local residency, past white collar crimes and civil infractions that bar ownership, and license caps), so don’t ignore the applicable municipal code standards either.

2.  Closing Can Be Chaos.

Most if not all states will tell cannabis businesses to report to them when new owners or parties of interest come into the picture. Why? Because of the federal enforcement priorities stemming from the now rescinded Cole Memo, every state must know exactly who is in control of/financing its cannabis licensees. Turning to M&A, every acquisition agreement has pre- and post-closing conditions and cannabis is no different. However, depending on the state or even the city or county in which the cannabis business operates, and due to new owner reporting requirements, conditions to and after closing will vary wildly. Ultimately, they will depend on whether state and local regulators demand that incoming owners close on business interests first so that they may be vetted and checked in that capacity, or they will depend on whether regulators must first examine the purchase agreement, approve the new owners prior to closing, and only then the new owners can take over. This is a very good reason why a one-size fits all boilerplate acquisition agreement is not going to work for your cannabis acquisitions. So, be sure to check what the subject state/locals require when it comes to closing.

3.  Diligence may be a Mess. 

The regulatory histories of most cannabis businesses are likely going to be chalk-full of various entitlements that enable the business to operate. And where cannabis remains federally illegal, a good amount of cannabis businesses are still operating on an all-cash basis and all of them are dealing with 280E. The diligence on these businesses then is usually more intense than other businesses. Would-be buyers need to exercise extreme care when vetting a cannabis business to look for ticking time bombs that surround state licensing compliance, local licensing compliance (which will be different depending on the local government), tax reporting (federal, state, and local) and specifically compliance with 280E (which can be a disaster). See here and here for how a cannabis business should prepare itself to sell. Also, if you’re buying a cannabis business that was operative under older, less restrictive regulations, you may face a situation where there’s little to no diligence at all because no records were kept and everything was done in cash (see Los Angeles for example).

4.  Valuations are All Over the Place. 

Pretty much every cannabis market in the U.S. is still emerging because they’re silo’ed marketplaces designed by state governments that continue to change as industry issues arise. Plus, the oldest regulated cannabis markets are Washington and Colorado (they’re only around 6 years old), which still doesn’t give us a ton of market data or operational history to properly value the businesses therein or in other states. Without a doubt, just having a cannabis license is valuable, but when a business is pre-revenue with, let’s say, a build-out ahead of it to satisfy local laws with constantly evolving state and local cannabis regulations in what will be a potentially saturated market in a couple of years, it’s really hard to say what the right valuation is. That hasn’t stopped certain cannabis businesses selling for pretty large sums though just based on the momentum of legalization and the prospect of market demand.

5.  You’ve Probably Already Violated State and Local Law. 

I cannot tell you the number of acquisitions our firm has seen after-the-fact where the parties violated state and local law from the outset of the agreement. Many folks don’t realize that, on the whole, state cannabis licenses are not transferable, so they cannot be individually bought and sold. You actually have to buy the company that holds the licenses (and all of its assets and liabilities). In addition, in most if not all states, you can’t separate licenses out from a vertically integrated company in order to sell them. And on average you can’t sell local entitlements either without them becoming void. There are also typically strict timing requirements in reporting acquisitions to both state and local regulators and parties usually violate those out of the gate because they’re either not aware or they don’t think that the reporting requirement applies to them. And if you take control of a cannabis business and do not tell regulators, your license is going to be in hot water. Specifically regarding the locals, if you’re dealing with a development agreement or other specific entitlement, assignment isn’t going to be freely allowed. The majority of the time, to get by the locals you not only have to ask for permission, you may even have to have a hearing in front of the City Council or Planning Commission to take over the entitlement. In certain states, taking over a cannabis business may even require cessation of the business and a new license application while the new owners are checked out. For the unwary or reckless buyer who may not know or care about the intensity of the regulations faced by cannabis businesses, their entire acquisition agreement may be completely illegal and grounds for license cancellation.

It’s only a matter of time before regulators begin investigating the nature of cannabis acquisitions to ensure that the transaction complied with applicable regulations. So, err on the safe side and make sure you know the regulations and your eligibility so that due diligence is smooth and compliance is less painful, and so that you don’t waste time and money on an illegal transaction.

Top Five Things to Know if You’re Building Your Cannabis Empire Through M&A posted first on https://centuryassociates.blogspot.com/

[centuryassociates]

Top Five Things to Know if You’re Building Your Cannabis Empire Through M&A

It’s no secret that multiple state-by-state operators are building their cannabis empires through aggressive mergers and acquisitions (“M&A”). Last year, our cannabis business attorneys closed more than $100 million in cannabis company acquisitions, and that shows no signs of stopping in 2019. Cannabis M&A is not your run-of-the-mill business dealing though, and working from boilerplate, rote M&A documents is hugely dangerous. In addition, diligence is oftentimes like a regulatory spiderweb laden with liabilities that other businesses do not face. In addition, the barriers to entry in the cannabis industry are increasingly high, tedious, and protectionist, which can really torture business deals. So, if you find yourself turning into a larger multi-state operator though acquiring cannabis businesses, below are the top five things you need to know.

1. Barriers to Entry

Every state is different in how it treats would-be cannabis licensees. And the differences between states are compounded by whether the state is medicinal, adult-use, low-CBD/high-THC, or all of the above. This translates into not everyone being eligible to own cannabis businesses. And these barriers to entry may include some or all of the following: residency requirements, local control elements that vary by city and county, liquidity standards, background checks, and invasive disclosures of personal information and past conduct in business and industry. Any prospective cannabis business purchaser needs to ensure that they meet all requirements for incoming owners before even contemplating a business purchase and expending time and hours negotiating a deal that may be legally impossible. Note also that localities are increasingly implementing their own barriers to entry (like local residency, past white collar crimes and civil infractions that bar ownership, and license caps), so don’t ignore the applicable municipal code standards either.

2.  Closing Can Be Chaos.

Most if not all states will tell cannabis businesses to report to them when new owners or parties of interest come into the picture. Why? Because of the federal enforcement priorities stemming from the now rescinded Cole Memo, every state must know exactly who is in control of/financing its cannabis licensees. Turning to M&A, every acquisition agreement has pre- and post-closing conditions and cannabis is no different. However, depending on the state or even the city or county in which the cannabis business operates, and due to new owner reporting requirements, conditions to and after closing will vary wildly. Ultimately, they will depend on whether state and local regulators demand that incoming owners close on business interests first so that they may be vetted and checked in that capacity, or they will depend on whether regulators must first examine the purchase agreement, approve the new owners prior to closing, and only then the new owners can take over. This is a very good reason why a one-size fits all boilerplate acquisition agreement is not going to work for your cannabis acquisitions. So, be sure to check what the subject state/locals require when it comes to closing.

3.  Diligence may be a Mess. 

The regulatory histories of most cannabis businesses are likely going to be chalk-full of various entitlements that enable the business to operate. And where cannabis remains federally illegal, a good amount of cannabis businesses are still operating on an all-cash basis and all of them are dealing with 280E. The diligence on these businesses then is usually more intense than other businesses. Would-be buyers need to exercise extreme care when vetting a cannabis business to look for ticking time bombs that surround state licensing compliance, local licensing compliance (which will be different depending on the local government), tax reporting (federal, state, and local) and specifically compliance with 280E (which can be a disaster). See here and here for how a cannabis business should prepare itself to sell. Also, if you’re buying a cannabis business that was operative under older, less restrictive regulations, you may face a situation where there’s little to no diligence at all because no records were kept and everything was done in cash (see Los Angeles for example).

4.  Valuations are All Over the Place. 

Pretty much every cannabis market in the U.S. is still emerging because they’re silo’ed marketplaces designed by state governments that continue to change as industry issues arise. Plus, the oldest regulated cannabis markets are Washington and Colorado (they’re only around 6 years old), which still doesn’t give us a ton of market data or operational history to properly value the businesses therein or in other states. Without a doubt, just having a cannabis license is valuable, but when a business is pre-revenue with, let’s say, a build-out ahead of it to satisfy local laws with constantly evolving state and local cannabis regulations in what will be a potentially saturated market in a couple of years, it’s really hard to say what the right valuation is. That hasn’t stopped certain cannabis businesses selling for pretty large sums though just based on the momentum of legalization and the prospect of market demand.

5.  You’ve Probably Already Violated State and Local Law. 

I cannot tell you the number of acquisitions our firm has seen after-the-fact where the parties violated state and local law from the outset of the agreement. Many folks don’t realize that, on the whole, state cannabis licenses are not transferable, so they cannot be individually bought and sold. You actually have to buy the company that holds the licenses (and all of its assets and liabilities). In addition, in most if not all states, you can’t separate licenses out from a vertically integrated company in order to sell them. And on average you can’t sell local entitlements either without them becoming void. There are also typically strict timing requirements in reporting acquisitions to both state and local regulators and parties usually violate those out of the gate because they’re either not aware or they don’t think that the reporting requirement applies to them. And if you take control of a cannabis business and do not tell regulators, your license is going to be in hot water. Specifically regarding the locals, if you’re dealing with a development agreement or other specific entitlement, assignment isn’t going to be freely allowed. The majority of the time, to get by the locals you not only have to ask for permission, you may even have to have a hearing in front of the City Council or Planning Commission to take over the entitlement. In certain states, taking over a cannabis business may even require cessation of the business and a new license application while the new owners are checked out. For the unwary or reckless buyer who may not know or care about the intensity of the regulations faced by cannabis businesses, their entire acquisition agreement may be completely illegal and grounds for license cancellation.

It’s only a matter of time before regulators begin investigating the nature of cannabis acquisitions to ensure that the transaction complied with applicable regulations. So, err on the safe side and make sure you know the regulations and your eligibility so that due diligence is smooth and compliance is less painful, and so that you don’t waste time and money on an illegal transaction.

Top Five Things to Know if You’re Building Your Cannabis Empire Through M&A posted first on https://centuryassociates.blogspot.com/

[centuryassociates]

Top Five Things to Know if You’re Building Your Cannabis Empire Through M&A

It’s no secret that multiple state-by-state operators are building their cannabis empires through aggressive mergers and acquisitions (“M&A”). Last year, our cannabis business attorneys closed more than $100 million in cannabis company acquisitions, and that shows no signs of stopping in 2019. Cannabis M&A is not your run-of-the-mill business dealing though, and working from boilerplate, rote M&A documents is hugely dangerous. In addition, diligence is oftentimes like a regulatory spiderweb laden with liabilities that other businesses do not face. In addition, the barriers to entry in the cannabis industry are increasingly high, tedious, and protectionist, which can really torture business deals. So, if you find yourself turning into a larger multi-state operator though acquiring cannabis businesses, below are the top five things you need to know.

1. Barriers to Entry

Every state is different in how it treats would-be cannabis licensees. And the differences between states are compounded by whether the state is medicinal, adult-use, low-CBD/high-THC, or all of the above. This translates into not everyone being eligible to own cannabis businesses. And these barriers to entry may include some or all of the following: residency requirements, local control elements that vary by city and county, liquidity standards, background checks, and invasive disclosures of personal information and past conduct in business and industry. Any prospective cannabis business purchaser needs to ensure that they meet all requirements for incoming owners before even contemplating a business purchase and expending time and hours negotiating a deal that may be legally impossible. Note also that localities are increasingly implementing their own barriers to entry (like local residency, past white collar crimes and civil infractions that bar ownership, and license caps), so don’t ignore the applicable municipal code standards either.

2.  Closing Can Be Chaos.

Most if not all states will tell cannabis businesses to report to them when new owners or parties of interest come into the picture. Why? Because of the federal enforcement priorities stemming from the now rescinded Cole Memo, every state must know exactly who is in control of/financing its cannabis licensees. Turning to M&A, every acquisition agreement has pre- and post-closing conditions and cannabis is no different. However, depending on the state or even the city or county in which the cannabis business operates, and due to new owner reporting requirements, conditions to and after closing will vary wildly. Ultimately, they will depend on whether state and local regulators demand that incoming owners close on business interests first so that they may be vetted and checked in that capacity, or they will depend on whether regulators must first examine the purchase agreement, approve the new owners prior to closing, and only then the new owners can take over. This is a very good reason why a one-size fits all boilerplate acquisition agreement is not going to work for your cannabis acquisitions. So, be sure to check what the subject state/locals require when it comes to closing.

3.  Diligence may be a Mess. 

The regulatory histories of most cannabis businesses are likely going to be chalk-full of various entitlements that enable the business to operate. And where cannabis remains federally illegal, a good amount of cannabis businesses are still operating on an all-cash basis and all of them are dealing with 280E. The diligence on these businesses then is usually more intense than other businesses. Would-be buyers need to exercise extreme care when vetting a cannabis business to look for ticking time bombs that surround state licensing compliance, local licensing compliance (which will be different depending on the local government), tax reporting (federal, state, and local) and specifically compliance with 280E (which can be a disaster). See here and here for how a cannabis business should prepare itself to sell. Also, if you’re buying a cannabis business that was operative under older, less restrictive regulations, you may face a situation where there’s little to no diligence at all because no records were kept and everything was done in cash (see Los Angeles for example).

4.  Valuations are All Over the Place. 

Pretty much every cannabis market in the U.S. is still emerging because they’re silo’ed marketplaces designed by state governments that continue to change as industry issues arise. Plus, the oldest regulated cannabis markets are Washington and Colorado (they’re only around 6 years old), which still doesn’t give us a ton of market data or operational history to properly value the businesses therein or in other states. Without a doubt, just having a cannabis license is valuable, but when a business is pre-revenue with, let’s say, a build-out ahead of it to satisfy local laws with constantly evolving state and local cannabis regulations in what will be a potentially saturated market in a couple of years, it’s really hard to say what the right valuation is. That hasn’t stopped certain cannabis businesses selling for pretty large sums though just based on the momentum of legalization and the prospect of market demand.

5.  You’ve Probably Already Violated State and Local Law. 

I cannot tell you the number of acquisitions our firm has seen after-the-fact where the parties violated state and local law from the outset of the agreement. Many folks don’t realize that, on the whole, state cannabis licenses are not transferable, so they cannot be individually bought and sold. You actually have to buy the company that holds the licenses (and all of its assets and liabilities). In addition, in most if not all states, you can’t separate licenses out from a vertically integrated company in order to sell them. And on average you can’t sell local entitlements either without them becoming void. There are also typically strict timing requirements in reporting acquisitions to both state and local regulators and parties usually violate those out of the gate because they’re either not aware or they don’t think that the reporting requirement applies to them. And if you take control of a cannabis business and do not tell regulators, your license is going to be in hot water. Specifically regarding the locals, if you’re dealing with a development agreement or other specific entitlement, assignment isn’t going to be freely allowed. The majority of the time, to get by the locals you not only have to ask for permission, you may even have to have a hearing in front of the City Council or Planning Commission to take over the entitlement. In certain states, taking over a cannabis business may even require cessation of the business and a new license application while the new owners are checked out. For the unwary or reckless buyer who may not know or care about the intensity of the regulations faced by cannabis businesses, their entire acquisition agreement may be completely illegal and grounds for license cancellation.

It’s only a matter of time before regulators begin investigating the nature of cannabis acquisitions to ensure that the transaction complied with applicable regulations. So, err on the safe side and make sure you know the regulations and your eligibility so that due diligence is smooth and compliance is less painful, and so that you don’t waste time and money on an illegal transaction.

Top Five Things to Know if You’re Building Your Cannabis Empire Through M&A posted first on https://centuryassociates.blogspot.com/

[centuryassociates]

Top Five Things to Know if You’re Building Your Cannabis Empire Through M&A

It’s no secret that multiple state-by-state operators are building their cannabis empires through aggressive mergers and acquisitions (“M&A”). Last year, our cannabis business attorneys closed more than $100 million in cannabis company acquisitions, and that shows no signs of stopping in 2019. Cannabis M&A is not your run-of-the-mill business dealing though, and working from boilerplate, rote M&A documents is hugely dangerous. In addition, diligence is oftentimes like a regulatory spiderweb laden with liabilities that other businesses do not face. In addition, the barriers to entry in the cannabis industry are increasingly high, tedious, and protectionist, which can really torture business deals. So, if you find yourself turning into a larger multi-state operator though acquiring cannabis businesses, below are the top five things you need to know.

1. Barriers to Entry

Every state is different in how it treats would-be cannabis licensees. And the differences between states are compounded by whether the state is medicinal, adult-use, low-CBD/high-THC, or all of the above. This translates into not everyone being eligible to own cannabis businesses. And these barriers to entry may include some or all of the following: residency requirements, local control elements that vary by city and county, liquidity standards, background checks, and invasive disclosures of personal information and past conduct in business and industry. Any prospective cannabis business purchaser needs to ensure that they meet all requirements for incoming owners before even contemplating a business purchase and expending time and hours negotiating a deal that may be legally impossible. Note also that localities are increasingly implementing their own barriers to entry (like local residency, past white collar crimes and civil infractions that bar ownership, and license caps), so don’t ignore the applicable municipal code standards either.

2.  Closing Can Be Chaos.

Most if not all states will tell cannabis businesses to report to them when new owners or parties of interest come into the picture. Why? Because of the federal enforcement priorities stemming from the now rescinded Cole Memo, every state must know exactly who is in control of/financing its cannabis licensees. Turning to M&A, every acquisition agreement has pre- and post-closing conditions and cannabis is no different. However, depending on the state or even the city or county in which the cannabis business operates, and due to new owner reporting requirements, conditions to and after closing will vary wildly. Ultimately, they will depend on whether state and local regulators demand that incoming owners close on business interests first so that they may be vetted and checked in that capacity, or they will depend on whether regulators must first examine the purchase agreement, approve the new owners prior to closing, and only then the new owners can take over. This is a very good reason why a one-size fits all boilerplate acquisition agreement is not going to work for your cannabis acquisitions. So, be sure to check what the subject state/locals require when it comes to closing.

3.  Diligence may be a Mess. 

The regulatory histories of most cannabis businesses are likely going to be chalk-full of various entitlements that enable the business to operate. And where cannabis remains federally illegal, a good amount of cannabis businesses are still operating on an all-cash basis and all of them are dealing with 280E. The diligence on these businesses then is usually more intense than other businesses. Would-be buyers need to exercise extreme care when vetting a cannabis business to look for ticking time bombs that surround state licensing compliance, local licensing compliance (which will be different depending on the local government), tax reporting (federal, state, and local) and specifically compliance with 280E (which can be a disaster). See here and here for how a cannabis business should prepare itself to sell. Also, if you’re buying a cannabis business that was operative under older, less restrictive regulations, you may face a situation where there’s little to no diligence at all because no records were kept and everything was done in cash (see Los Angeles for example).

4.  Valuations are All Over the Place. 

Pretty much every cannabis market in the U.S. is still emerging because they’re silo’ed marketplaces designed by state governments that continue to change as industry issues arise. Plus, the oldest regulated cannabis markets are Washington and Colorado (they’re only around 6 years old), which still doesn’t give us a ton of market data or operational history to properly value the businesses therein or in other states. Without a doubt, just having a cannabis license is valuable, but when a business is pre-revenue with, let’s say, a build-out ahead of it to satisfy local laws with constantly evolving state and local cannabis regulations in what will be a potentially saturated market in a couple of years, it’s really hard to say what the right valuation is. That hasn’t stopped certain cannabis businesses selling for pretty large sums though just based on the momentum of legalization and the prospect of market demand.

5.  You’ve Probably Already Violated State and Local Law. 

I cannot tell you the number of acquisitions our firm has seen after-the-fact where the parties violated state and local law from the outset of the agreement. Many folks don’t realize that, on the whole, state cannabis licenses are not transferable, so they cannot be individually bought and sold. You actually have to buy the company that holds the licenses (and all of its assets and liabilities). In addition, in most if not all states, you can’t separate licenses out from a vertically integrated company in order to sell them. And on average you can’t sell local entitlements either without them becoming void. There are also typically strict timing requirements in reporting acquisitions to both state and local regulators and parties usually violate those out of the gate because they’re either not aware or they don’t think that the reporting requirement applies to them. And if you take control of a cannabis business and do not tell regulators, your license is going to be in hot water. Specifically regarding the locals, if you’re dealing with a development agreement or other specific entitlement, assignment isn’t going to be freely allowed. The majority of the time, to get by the locals you not only have to ask for permission, you may even have to have a hearing in front of the City Council or Planning Commission to take over the entitlement. In certain states, taking over a cannabis business may even require cessation of the business and a new license application while the new owners are checked out. For the unwary or reckless buyer who may not know or care about the intensity of the regulations faced by cannabis businesses, their entire acquisition agreement may be completely illegal and grounds for license cancellation.

It’s only a matter of time before regulators begin investigating the nature of cannabis acquisitions to ensure that the transaction complied with applicable regulations. So, err on the safe side and make sure you know the regulations and your eligibility so that due diligence is smooth and compliance is less painful, and so that you don’t waste time and money on an illegal transaction.

Top Five Things to Know if You’re Building Your Cannabis Empire Through M&A posted first on https://centuryassociates.blogspot.com/

[centuryassociates]

Top Five Things to Know if You’re Building Your Cannabis Empire Through M&A

It’s no secret that multiple state-by-state operators are building their cannabis empires through aggressive mergers and acquisitions (“M&A”). Last year, our cannabis business attorneys closed more than $100 million in cannabis company acquisitions, and that shows no signs of stopping in 2019. Cannabis M&A is not your run-of-the-mill business dealing though, and working from boilerplate, rote M&A documents is hugely dangerous. In addition, diligence is oftentimes like a regulatory spiderweb laden with liabilities that other businesses do not face. In addition, the barriers to entry in the cannabis industry are increasingly high, tedious, and protectionist, which can really torture business deals. So, if you find yourself turning into a larger multi-state operator though acquiring cannabis businesses, below are the top five things you need to know.

1. Barriers to Entry

Every state is different in how it treats would-be cannabis licensees. And the differences between states are compounded by whether the state is medicinal, adult-use, low-CBD/high-THC, or all of the above. This translates into not everyone being eligible to own cannabis businesses. And these barriers to entry may include some or all of the following: residency requirements, local control elements that vary by city and county, liquidity standards, background checks, and invasive disclosures of personal information and past conduct in business and industry. Any prospective cannabis business purchaser needs to ensure that they meet all requirements for incoming owners before even contemplating a business purchase and expending time and hours negotiating a deal that may be legally impossible. Note also that localities are increasingly implementing their own barriers to entry (like local residency, past white collar crimes and civil infractions that bar ownership, and license caps), so don’t ignore the applicable municipal code standards either.

2.  Closing Can Be Chaos.

Most if not all states will tell cannabis businesses to report to them when new owners or parties of interest come into the picture. Why? Because of the federal enforcement priorities stemming from the now rescinded Cole Memo, every state must know exactly who is in control of/financing its cannabis licensees. Turning to M&A, every acquisition agreement has pre- and post-closing conditions and cannabis is no different. However, depending on the state or even the city or county in which the cannabis business operates, and due to new owner reporting requirements, conditions to and after closing will vary wildly. Ultimately, they will depend on whether state and local regulators demand that incoming owners close on business interests first so that they may be vetted and checked in that capacity, or they will depend on whether regulators must first examine the purchase agreement, approve the new owners prior to closing, and only then the new owners can take over. This is a very good reason why a one-size fits all boilerplate acquisition agreement is not going to work for your cannabis acquisitions. So, be sure to check what the subject state/locals require when it comes to closing.

3.  Diligence may be a Mess. 

The regulatory histories of most cannabis businesses are likely going to be chalk-full of various entitlements that enable the business to operate. And where cannabis remains federally illegal, a good amount of cannabis businesses are still operating on an all-cash basis and all of them are dealing with 280E. The diligence on these businesses then is usually more intense than other businesses. Would-be buyers need to exercise extreme care when vetting a cannabis business to look for ticking time bombs that surround state licensing compliance, local licensing compliance (which will be different depending on the local government), tax reporting (federal, state, and local) and specifically compliance with 280E (which can be a disaster). See here and here for how a cannabis business should prepare itself to sell. Also, if you’re buying a cannabis business that was operative under older, less restrictive regulations, you may face a situation where there’s little to no diligence at all because no records were kept and everything was done in cash (see Los Angeles for example).

4.  Valuations are All Over the Place. 

Pretty much every cannabis market in the U.S. is still emerging because they’re silo’ed marketplaces designed by state governments that continue to change as industry issues arise. Plus, the oldest regulated cannabis markets are Washington and Colorado (they’re only around 6 years old), which still doesn’t give us a ton of market data or operational history to properly value the businesses therein or in other states. Without a doubt, just having a cannabis license is valuable, but when a business is pre-revenue with, let’s say, a build-out ahead of it to satisfy local laws with constantly evolving state and local cannabis regulations in what will be a potentially saturated market in a couple of years, it’s really hard to say what the right valuation is. That hasn’t stopped certain cannabis businesses selling for pretty large sums though just based on the momentum of legalization and the prospect of market demand.

5.  You’ve Probably Already Violated State and Local Law. 

I cannot tell you the number of acquisitions our firm has seen after-the-fact where the parties violated state and local law from the outset of the agreement. Many folks don’t realize that, on the whole, state cannabis licenses are not transferable, so they cannot be individually bought and sold. You actually have to buy the company that holds the licenses (and all of its assets and liabilities). In addition, in most if not all states, you can’t separate licenses out from a vertically integrated company in order to sell them. And on average you can’t sell local entitlements either without them becoming void. There are also typically strict timing requirements in reporting acquisitions to both state and local regulators and parties usually violate those out of the gate because they’re either not aware or they don’t think that the reporting requirement applies to them. And if you take control of a cannabis business and do not tell regulators, your license is going to be in hot water. Specifically regarding the locals, if you’re dealing with a development agreement or other specific entitlement, assignment isn’t going to be freely allowed. The majority of the time, to get by the locals you not only have to ask for permission, you may even have to have a hearing in front of the City Council or Planning Commission to take over the entitlement. In certain states, taking over a cannabis business may even require cessation of the business and a new license application while the new owners are checked out. For the unwary or reckless buyer who may not know or care about the intensity of the regulations faced by cannabis businesses, their entire acquisition agreement may be completely illegal and grounds for license cancellation.

It’s only a matter of time before regulators begin investigating the nature of cannabis acquisitions to ensure that the transaction complied with applicable regulations. So, err on the safe side and make sure you know the regulations and your eligibility so that due diligence is smooth and compliance is less painful, and so that you don’t waste time and money on an illegal transaction.

Top Five Things to Know if You’re Building Your Cannabis Empire Through M&A posted first on https://centuryassociates.blogspot.com/

[centuryassociates]

Top Five Things to Know if You’re Building Your Cannabis Empire Through M&A

It’s no secret that multiple state-by-state operators are building their cannabis empires through aggressive mergers and acquisitions (“M&A”). Last year, our cannabis business attorneys closed more than $100 million in cannabis company acquisitions, and that shows no signs of stopping in 2019. Cannabis M&A is not your run-of-the-mill business dealing though, and working from boilerplate, rote M&A documents is hugely dangerous. In addition, diligence is oftentimes like a regulatory spiderweb laden with liabilities that other businesses do not face. In addition, the barriers to entry in the cannabis industry are increasingly high, tedious, and protectionist, which can really torture business deals. So, if you find yourself turning into a larger multi-state operator though acquiring cannabis businesses, below are the top five things you need to know.

1. Barriers to Entry

Every state is different in how it treats would-be cannabis licensees. And the differences between states are compounded by whether the state is medicinal, adult-use, low-CBD/high-THC, or all of the above. This translates into not everyone being eligible to own cannabis businesses. And these barriers to entry may include some or all of the following: residency requirements, local control elements that vary by city and county, liquidity standards, background checks, and invasive disclosures of personal information and past conduct in business and industry. Any prospective cannabis business purchaser needs to ensure that they meet all requirements for incoming owners before even contemplating a business purchase and expending time and hours negotiating a deal that may be legally impossible. Note also that localities are increasingly implementing their own barriers to entry (like local residency, past white collar crimes and civil infractions that bar ownership, and license caps), so don’t ignore the applicable municipal code standards either.

2.  Closing Can Be Chaos.

Most if not all states will tell cannabis businesses to report to them when new owners or parties of interest come into the picture. Why? Because of the federal enforcement priorities stemming from the now rescinded Cole Memo, every state must know exactly who is in control of/financing its cannabis licensees. Turning to M&A, every acquisition agreement has pre- and post-closing conditions and cannabis is no different. However, depending on the state or even the city or county in which the cannabis business operates, and due to new owner reporting requirements, conditions to and after closing will vary wildly. Ultimately, they will depend on whether state and local regulators demand that incoming owners close on business interests first so that they may be vetted and checked in that capacity, or they will depend on whether regulators must first examine the purchase agreement, approve the new owners prior to closing, and only then the new owners can take over. This is a very good reason why a one-size fits all boilerplate acquisition agreement is not going to work for your cannabis acquisitions. So, be sure to check what the subject state/locals require when it comes to closing.

3.  Diligence may be a Mess. 

The regulatory histories of most cannabis businesses are likely going to be chalk-full of various entitlements that enable the business to operate. And where cannabis remains federally illegal, a good amount of cannabis businesses are still operating on an all-cash basis and all of them are dealing with 280E. The diligence on these businesses then is usually more intense than other businesses. Would-be buyers need to exercise extreme care when vetting a cannabis business to look for ticking time bombs that surround state licensing compliance, local licensing compliance (which will be different depending on the local government), tax reporting (federal, state, and local) and specifically compliance with 280E (which can be a disaster). See here and here for how a cannabis business should prepare itself to sell. Also, if you’re buying a cannabis business that was operative under older, less restrictive regulations, you may face a situation where there’s little to no diligence at all because no records were kept and everything was done in cash (see Los Angeles for example).

4.  Valuations are All Over the Place. 

Pretty much every cannabis market in the U.S. is still emerging because they’re silo’ed marketplaces designed by state governments that continue to change as industry issues arise. Plus, the oldest regulated cannabis markets are Washington and Colorado (they’re only around 6 years old), which still doesn’t give us a ton of market data or operational history to properly value the businesses therein or in other states. Without a doubt, just having a cannabis license is valuable, but when a business is pre-revenue with, let’s say, a build-out ahead of it to satisfy local laws with constantly evolving state and local cannabis regulations in what will be a potentially saturated market in a couple of years, it’s really hard to say what the right valuation is. That hasn’t stopped certain cannabis businesses selling for pretty large sums though just based on the momentum of legalization and the prospect of market demand.

5.  You’ve Probably Already Violated State and Local Law. 

I cannot tell you the number of acquisitions our firm has seen after-the-fact where the parties violated state and local law from the outset of the agreement. Many folks don’t realize that, on the whole, state cannabis licenses are not transferable, so they cannot be individually bought and sold. You actually have to buy the company that holds the licenses (and all of its assets and liabilities). In addition, in most if not all states, you can’t separate licenses out from a vertically integrated company in order to sell them. And on average you can’t sell local entitlements either without them becoming void. There are also typically strict timing requirements in reporting acquisitions to both state and local regulators and parties usually violate those out of the gate because they’re either not aware or they don’t think that the reporting requirement applies to them. And if you take control of a cannabis business and do not tell regulators, your license is going to be in hot water. Specifically regarding the locals, if you’re dealing with a development agreement or other specific entitlement, assignment isn’t going to be freely allowed. The majority of the time, to get by the locals you not only have to ask for permission, you may even have to have a hearing in front of the City Council or Planning Commission to take over the entitlement. In certain states, taking over a cannabis business may even require cessation of the business and a new license application while the new owners are checked out. For the unwary or reckless buyer who may not know or care about the intensity of the regulations faced by cannabis businesses, their entire acquisition agreement may be completely illegal and grounds for license cancellation.

It’s only a matter of time before regulators begin investigating the nature of cannabis acquisitions to ensure that the transaction complied with applicable regulations. So, err on the safe side and make sure you know the regulations and your eligibility so that due diligence is smooth and compliance is less painful, and so that you don’t waste time and money on an illegal transaction.

Top Five Things to Know if You’re Building Your Cannabis Empire Through M&A posted first on https://centuryassociates.blogspot.com/

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Top Five Things to Know if You’re Building Your Cannabis Empire Through M&A

It’s no secret that multiple state-by-state operators are building their cannabis empires through aggressive mergers and acquisitions (“M&A”). Last year, our cannabis business attorneys closed more than $100 million in cannabis company acquisitions, and that shows no signs of stopping in 2019. Cannabis M&A is not your run-of-the-mill business dealing though, and working from boilerplate, rote M&A documents is hugely dangerous. In addition, diligence is oftentimes like a regulatory spiderweb laden with liabilities that other businesses do not face. In addition, the barriers to entry in the cannabis industry are increasingly high, tedious, and protectionist, which can really torture business deals. So, if you find yourself turning into a larger multi-state operator though acquiring cannabis businesses, below are the top five things you need to know.

1. Barriers to Entry

Every state is different in how it treats would-be cannabis licensees. And the differences between states are compounded by whether the state is medicinal, adult-use, low-CBD/high-THC, or all of the above. This translates into not everyone being eligible to own cannabis businesses. And these barriers to entry may include some or all of the following: residency requirements, local control elements that vary by city and county, liquidity standards, background checks, and invasive disclosures of personal information and past conduct in business and industry. Any prospective cannabis business purchaser needs to ensure that they meet all requirements for incoming owners before even contemplating a business purchase and expending time and hours negotiating a deal that may be legally impossible. Note also that localities are increasingly implementing their own barriers to entry (like local residency, past white collar crimes and civil infractions that bar ownership, and license caps), so don’t ignore the applicable municipal code standards either.

2.  Closing Can Be Chaos.

Most if not all states will tell cannabis businesses to report to them when new owners or parties of interest come into the picture. Why? Because of the federal enforcement priorities stemming from the now rescinded Cole Memo, every state must know exactly who is in control of/financing its cannabis licensees. Turning to M&A, every acquisition agreement has pre- and post-closing conditions and cannabis is no different. However, depending on the state or even the city or county in which the cannabis business operates, and due to new owner reporting requirements, conditions to and after closing will vary wildly. Ultimately, they will depend on whether state and local regulators demand that incoming owners close on business interests first so that they may be vetted and checked in that capacity, or they will depend on whether regulators must first examine the purchase agreement, approve the new owners prior to closing, and only then the new owners can take over. This is a very good reason why a one-size fits all boilerplate acquisition agreement is not going to work for your cannabis acquisitions. So, be sure to check what the subject state/locals require when it comes to closing.

3.  Diligence may be a Mess. 

The regulatory histories of most cannabis businesses are likely going to be chalk-full of various entitlements that enable the business to operate. And where cannabis remains federally illegal, a good amount of cannabis businesses are still operating on an all-cash basis and all of them are dealing with 280E. The diligence on these businesses then is usually more intense than other businesses. Would-be buyers need to exercise extreme care when vetting a cannabis business to look for ticking time bombs that surround state licensing compliance, local licensing compliance (which will be different depending on the local government), tax reporting (federal, state, and local) and specifically compliance with 280E (which can be a disaster). See here and here for how a cannabis business should prepare itself to sell. Also, if you’re buying a cannabis business that was operative under older, less restrictive regulations, you may face a situation where there’s little to no diligence at all because no records were kept and everything was done in cash (see Los Angeles for example).

4.  Valuations are All Over the Place. 

Pretty much every cannabis market in the U.S. is still emerging because they’re silo’ed marketplaces designed by state governments that continue to change as industry issues arise. Plus, the oldest regulated cannabis markets are Washington and Colorado (they’re only around 6 years old), which still doesn’t give us a ton of market data or operational history to properly value the businesses therein or in other states. Without a doubt, just having a cannabis license is valuable, but when a business is pre-revenue with, let’s say, a build-out ahead of it to satisfy local laws with constantly evolving state and local cannabis regulations in what will be a potentially saturated market in a couple of years, it’s really hard to say what the right valuation is. That hasn’t stopped certain cannabis businesses selling for pretty large sums though just based on the momentum of legalization and the prospect of market demand.

5.  You’ve Probably Already Violated State and Local Law. 

I cannot tell you the number of acquisitions our firm has seen after-the-fact where the parties violated state and local law from the outset of the agreement. Many folks don’t realize that, on the whole, state cannabis licenses are not transferable, so they cannot be individually bought and sold. You actually have to buy the company that holds the licenses (and all of its assets and liabilities). In addition, in most if not all states, you can’t separate licenses out from a vertically integrated company in order to sell them. And on average you can’t sell local entitlements either without them becoming void. There are also typically strict timing requirements in reporting acquisitions to both state and local regulators and parties usually violate those out of the gate because they’re either not aware or they don’t think that the reporting requirement applies to them. And if you take control of a cannabis business and do not tell regulators, your license is going to be in hot water. Specifically regarding the locals, if you’re dealing with a development agreement or other specific entitlement, assignment isn’t going to be freely allowed. The majority of the time, to get by the locals you not only have to ask for permission, you may even have to have a hearing in front of the City Council or Planning Commission to take over the entitlement. In certain states, taking over a cannabis business may even require cessation of the business and a new license application while the new owners are checked out. For the unwary or reckless buyer who may not know or care about the intensity of the regulations faced by cannabis businesses, their entire acquisition agreement may be completely illegal and grounds for license cancellation.

It’s only a matter of time before regulators begin investigating the nature of cannabis acquisitions to ensure that the transaction complied with applicable regulations. So, err on the safe side and make sure you know the regulations and your eligibility so that due diligence is smooth and compliance is less painful, and so that you don’t waste time and money on an illegal transaction.

Top Five Things to Know if You’re Building Your Cannabis Empire Through M&A posted first on https://centuryassociates.blogspot.com/