Overview
In cannabis, the license is often the most valuable asset, and it is also the easiest to lose. A license with an undisclosed owner, a pending violation, a lapsed local approval or a management agreement the regulator never reviewed can be worth far less than it looks. Cannabis due diligence asks whether the license is in good standing, whether the deal can be approved and whether the business behind it actually works.
We look at a target the way we look at our own stores: the regulatory file, the ownership chain, the inspection history, the books, the lease, the team and the numbers on the sales floor. You get a clear report that separates deal-breakers from fixable issues, so you and your attorney can price and structure the deal.
Who this is for
- Buyers of a dispensary, license or stake
- Investors putting money into a licensee
- Lenders and landlords with exposure to a cannabis tenant
- Operators merging with or acquiring another licensee
Problems we solve
Hidden ownership
Undisclosed investors, side agreements or control rights that the regulator has not approved.
Compliance history
Open violations, corrective action plans or patterns that put the license at risk.
Deals that cannot be approved
The buyer would exceed a license cap, fail a residency or social equity rule or need approvals that take a year.
Numbers that do not hold
Reported sales and margins that do not match the seed-to-sale data, inventory or bank records.
How we review a target
We start with the regulatory file, because issues there can stop a deal outright: license status, conditions, inspection history, local approvals and any pending matters. Then we follow the ownership chain and the agreements to confirm that everyone with an interest has been disclosed and that the buyer can be approved.
Finally we look at the business the way an operator would. We visit the store, compare reported results with POS and seed-to-sale data, test inventory, review the lease and meet the team. You get findings ranked by severity as we find them, not a surprise at the end.
What is included
License and regulatory
- License status, conditions and renewal dates
- Inspection, violation and corrective action history
- Local approvals and host agreement obligations
- Approval path and timeline for the proposed deal
Ownership and agreements
- Ownership chain and true party of interest review
- Management, services, IP and supply agreements
- Lease review for assignment, use and approval terms
- Caps and eligibility checks for the buyer
Operations and financials
- Site visit and mock inspection
- Sales, margin and labor review against seed-to-sale and POS data
- Inventory and shrink review
- Team, systems and SOP assessment
Report
- Red, amber and green findings
- Deal-breakers, price adjusters and conditions to close
- Post-closing integration priorities
How the engagement runs
Discovery call
We learn the deal, the target, your role and your deadline.
Document request
We send a tailored request list and set up a data room review.
Review and site visit
We review documents, visit the store and interview management.
Findings
We brief you and your counsel on findings as they arise, not only at the end.
Final report
You get a written report with recommendations for price, structure and conditions.
Typical timeline
| Phase | Typical timing |
|---|---|
| Document request and review | Weeks 1 to 3 |
| Site visit and interviews | Weeks 2 to 4 |
| Report | Weeks 3 to 6 |
Timelines depend on your state, your town and how quickly documents are ready. Anything that waits on a regulator or a local board runs on their schedule.
What you provide
- Access to the target's documents and data
- The deal terms and structure
- Your attorney and accountant for legal and tax diligence
Frequently asked questions
What is regulatory due diligence in cannabis?
A review of a license and its business to confirm good standing, ownership, compliance history and whether a proposed deal can be approved, alongside operational and financial checks.
Do you replace legal and financial diligence?
No. We cover the regulatory and operating side and coordinate with your attorney and accountant, who handle legal and tax diligence.
Can you tell me if the regulator will approve the deal?
We can identify the approvals needed, the rules that apply and the risks. The regulator decides.
How quickly can you turn around diligence?
A focused review can be done in two weeks if documents are available. Most take three to six weeks.
Do you review a store's real performance?
Yes. We compare reported results with POS, seed-to-sale and inventory data and visit the store.
How is diligence priced?
Engagements are scoped and quoted after a discovery call, based on the size of the target and the deadline.
What are the most common deal-breakers?
Undisclosed owners or control rights, a buyer who would exceed a license cap or fail eligibility rules, unresolved violations, a lease that cannot be assigned and reported financials that do not match the store's own data.