Hemp and Cannabis: An M&A Crossroads

A Point in History: Support for legalization of cannabis is marching state-by-state across the US. Hemp has been federally legalized. Both are emerging industries representing billions of dollars in commerce; both are being created from whole cloth because 70 years of cannabis prohibition has demolished any cultivation, manufacturing and supply chain and distribution capabilities. We are literally watching the creation of two behemoth industry emerge before our eyes.

Regulatory Confusion: Much confusion exists regarding differences in regulation between hemp and cannabis. Cannabis is regulated by a patchwork of conflicting state laws and intra-state regulations (particularly in California) vary widely jurisdiction-by-jurisdiction creating “dry” counties and cities adjacent to cannabis dense municipalities. Taxation methods and amount vary widely between jurisdictions and competition between jurisdictions for jobs and tax revenue are emerging.

Un-bankable? Cannabis operators have great difficulty securing MRB (Marijuana-Related Business) accounts. Scaling rapidly in a cash economy creates extreme inefficiencies.

Volatile Operating Margins: To compound this problem, accounting transparency is just starting to emerge; standard operating margins are unknown; accurate analytic metrics are not available and SG&A expenses are escalating far faster than revenue or gross profit.

Scarce Capital: Given the squeamish nature of banks and other lenders, capital in this sector is scarce and expensive. Combined with explosive growth, cannabis operators cannot grow out of cash flow and face a desert of financing options.

In this wild, wilderness of deal flow, how can an M&A professional survive and prosper? Please join us for a panel discussion on this timely topic!

Panelists

RICHARD P. ORMOND
Mr. Ormond is a partner with Buchalter, a top LA law firm. In 2018 Mr. Ormond was nominated for the prestigious “Leader in Law” award by the Los Angeles Business Journal and he was previously selected as one of “Los Angeles’ Top 100 Lawyers.”  He is repeatedly recognized as a “Super Lawyer” and he was recently selected as one of the “Top Cannabis Law Experts in the United States” by Databird Research Journal.

RYAN RAMAGE
Mr. Ramage serves as a Co-Managing Partner of Jörd Capital and as Chief Executive Officer whereas he is responsible for overall operations of the Fund. As part of the Investment Advisory Committee, he assists the committee on selection of the assets to pursue underwriting.

Ryan is a real estate executive with 14-years’ experience who specializes in structured finance, capital placement and brokering real estate investment sales throughout the US. Through his efforts he has helped his clients raise hundreds of millions of dollars for real estate development and investment projects. Through his brokerage services he has completed numerous transactions, totaling several billion in total consideration and comprised over nearly ten million sq. ft. of property.

BRETON PEACE
Mr. Peace has successfully structured, negotiated, and documented a wide range of complex and first-of-a-kind commercial transactions in highly regulated industries including nuclear energy, gaming, telecommunications, and now, cannabis.

Bret has substantial experience representing sponsors, host governments, and lenders in project development and finance transactions involving a variety of infrastructure and real estate development projects, both domestically and internationally.

STACEY ARNOLD
Ms. Arnold is the founder of the Amaren Group specializing in cannabis licensing, compliance and pre-IPO and/or merger preparation. The Amaren Group works in tandem with auditors and investment bankers to prepare clients for the major leagues, and are experts in cannabis applications, permitting & licensing, regulatory compliance, business process improvement, ERP consulting & project management and organizational change management.

Over the past six years, Stacy's focus has been in the cannabis industry where she developed the framework for the first financial statement audit of a publicly-traded cannabis dispensary and oversaw the internal audit process for the first SOX-compliant company in the cannabis industry.

ERIC ASKELSON
Eric is Founder and Partner of ATG Group. He is a CPA with over 25 years of experience specializing in business tax planning strategy and compliance as well as tax accounting for small to mid-sized public companies. Eric has specialized in the cannabis industry for the past 10 years in the areas of accounting remediation, tax planning and compliance, and GoPublic preparation.

Eric is a graduate of the California State University, Fullerton, and has a Masters in Taxation from San Diego State University.  

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