What Do Cannabis Businesses Need to Understand About Exit Strategies?

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As cannabis businesses grow and change, having an exit strategy is essential for success and continued growth. Exit strategies are often used to maximize the value of a business when it is time to sell or transition ownership. While no two cannabis businesses are alike, there are some key factors that all cannabis businesses should consider when creating an exit strategy.

The first factor to consider when developing an exit strategy is the current financial standing of the business. A cannabis CFO can help review the financials and create an accurate picture of the company’s assets and liabilities that will be needed to support a successful exit plan. Understanding available cash flow and other sources of capital can help determine whether selling or transitioning ownership is financially feasible in the short term and long term.

In addition to understanding potential financial benefits, cannabis businesses also need to understand how taxes will affect their exit plans. Qualified cannabis bookkeepers are paramount to ensuring that the books are prepared proficiently to prepare the necessary financial statements for the seller and the owner. Cannabis accounting and cannabis CPA services can provide guidance on tax-related issues that may arise during a sale or transition of ownership. It is important to meet with a qualified cannabis accountant before making any decisions so that all tax implications are taken into consideration.

Finally, cannabis businesses should consider their legal obligations when developing their exit strategies. Laws governing licenses, labor requirements, real estate leases, contracts with vendors or suppliers, intellectual property rights, and zoning requirements may have significant impacts on any proposed sale or transfer of ownership. A good cannabis CPA who is also an exit strategist will have a team of professionals such as a lawyer, certified financial planner, insurance broker, etcetera to facilitate an optimal exit plan..

Exit strategies require careful consideration as they can have a major impact on a cannabis business’s future success. Working with experienced personnel such as a cannabis CFO for financial guidance and strategic cannabis accounting services for tax compliance can help ensure that all potential risks are addressed in advance and enable companies to maximize value from their exits. By taking these steps at the start of the planning process, cannabis businesses will be better prepared to make informed decisions that benefit them both now and in the future.

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