I don't know how it came to be, exactly, but I've spent
countless hours of my adult working life aiding due diligence on cannabis transactions. These
transactions involve all kinds of companies, from sole
proprietorships to public companies, and a variety of
deals–from leasing, to financing, to good old M&A. Today,
I'll cover how diligence works in the regulated cannabis world,
and some common red flags we see during the process.
What is due diligence in a cannabis transaction?
Due diligence in a cannabis deal is like diligence in a
non-cannabis deal, with some nuance and regulatory overlay. Simply
put, due diligence is a voluntary process where one party vets and
investigates another, or some asset or obligation of the other.
This is principally done by requesting information and documents,
which may be housed in a data room or exchanged in some other way.
A purchaser or investor, or their agents, may also conduct public
records searches, including FOIA requests
