Getting to closing on a cannabis M&A transaction is always a hurdle (read about that process in detail here). There are always a lot more contingencies to closing for cannabis M&A transactions than for run-of-the-mill businesses that don’t operate in highly regulated fields (e.g., cannabis acquisitions will require approval from state and possibly local agencies).
One closing condition that people often don’t focus on enough is landlord consent which often can be a huge challenge. In this post, I’ll look at why this is even an issue, and what makes it so challenging.
For the purposes of this post, I’ll focus mainly on business and asset purchase transactions. In California, M&A transactions generally involve business purchases given rules that prohibit transfer of license. Other jurisdictions may allow licenses to be transferred or at least obtained more easily while a business continues to operate and so purchases of all assets of the business (including their leasehold interest in the property they use) may be more common.
Whether someone is buying some of a cannabis business, all of a cannabis business, or just the assets of a cannabis business, the buyer is going to need to get the landlord that owns the property