When someone buys a cannabis business, and not just that
business's assets, they essentially inherit all of its
liabilities. And there are usually a lot.
If the business is in the midst of a lawsuit, owes back taxes,
is behind on rent, etc., the buyer will need to deal with those
problems on its own–unless the purchase agreement requires
some form of assistance from the seller.
Smart cannabis business buyers spend a lot of time doing
"diligence" on the target business either before signing
a purchase agreement or before closing, in large part to flag
potential liabilities. But in some cases, buyers fail to ask the
right questions or sellers (whether intentionally or not) fail to
disclose material information about the business.
