Investing In Cannabis During A Crisis: What To Know About Stocks, Debt,  Equity, M&A | Cannabis Culture

Los Angeles Venture Association (LAVA) recently hosted a webinar discussing the recent uptick of merger and acquisition activity over the last six months, and the trends that will impact the future of the market.

Two reasons for the uptick in cannabis industry investments are confidence in the economy and elections which helped legalize cannabis.  Momentum in states like Texas have increased confidence for investors to enter in the cannabis industry.   With increased capital but lack of federal regulations, investors are embracing creative hybrid financing structures, such as convertible debt that might go away through federal legislation or judicial intervention.  While many investors are focusing on regional sales, large companies that can taking higher risks are now moving in and driving the market.

One issue raised that is relevant to cannabis company valuation is the quality of company “housekeeping” – what is the quality of records of the company, what are its outstanding legal issues, and what structuring issues are invoked by having multistate operations?  For the company, this likely means any valuation issue will require experienced M&A counsel.  For investors looking at cannabis businesses, understanding how housekeeping matters can affect valuation is critical.  In addition, when outstanding legal issues can affect valuation having legal counsel who can analyze the underlying issue and determine its valuation impact is critical.

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Photo of Steve Hecht Steve Hecht

Steve Hecht is a go-to trial lawyer for hedge funds, institutional investors, family offices, university endowments, venture funds and other investors interested in utilizing the legal process to create value for their own investors. Whether by activist litigation, fiduciary duty claims, or appraisal…

Steve Hecht is a go-to trial lawyer for hedge funds, institutional investors, family offices, university endowments, venture funds and other investors interested in utilizing the legal process to create value for their own investors. Whether by activist litigation, fiduciary duty claims, or appraisal and other valuation strategies, Steve has extensive experience across the gamut of options for shareholders.  He regularly tries cases in Delaware Chancery Court and around the country for clients seeking outsized returns. Steve is a partner of Rolnick Kramer Sadighi LLP.

Photo of Rich Bodnar Rich Bodnar

Rich is an experienced securities litigator focusing on value-generating legal strategy.  Rich brings to each matter a deep knowledge of the quantitative methods side of securities litigation, especially damages computation, event studies, econometrics/economics and the theories, tools, and strategies involved in the preservation…

Rich is an experienced securities litigator focusing on value-generating legal strategy.  Rich brings to each matter a deep knowledge of the quantitative methods side of securities litigation, especially damages computation, event studies, econometrics/economics and the theories, tools, and strategies involved in the preservation and maximization of the value of client’s securities claims.