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If you’re going to buy a cannabis license in BC, which usually means buying a cannabis store and its assets, there are many small steps in the journey to closing the deal. Below, we summarize five most important things to do before signing on the dotted line.
Ask Yourself Questions
Before buying a cannabis license, ask yourself the following questions:
Why Do I Want to Buy a Cannabis Store?
Some people buy a cannabis store rather than starting from scratch (i.e., applying for a license, finding and leasing property, going through public consultation) to mitigate uncertainty, risk and time involved. By purchasing an already approved cannabis store, this risk is mitigated, and owners can generate revenue at a much quicker pace.
Will I Work in the Cannabis Store and Oversee Operations?
You may want to invest in a cannabis store as a revenue stream but want to hire others to manage the operation, or you may want to be part of the day-to-day operations.
Are My Expectations Realistic?
Measure expectations against the reality of ownership, current and future economic climate, and your ability to shoulder the financial responsibility. You’ll find that buying a cannabis license is all about measuring expectations against data and facts. If your expectations and data don’t align, the data won’t budge, so you’ll have to adjust expectations or reconsider ownership.
Do Market Research
Find the asking price of cannabis stores in BC by doing a Google search. Note the asking price, square footage, assets, net profit (if listed) of listings now and for the past six months. Read the December 2021 Cannabis Retailer article “Sales Per Store: How Do You Stack Up?” which provides sales averages per store by province. Check Statistics Canada “Retail trade sales by province and territory”. If you know the number of cannabis stores in BC (or any province), you can divide the total revenue by the number of stores to estimate average monthly sales. This is helpful when trying to determine what City you should buy in. Not all cities are created equally and population, demographics and even cannabis policies of each city should be looked at to help determine store viability.
Ask the Business Owner or Their Representative Questions
Through your representative or a BC cannabis license consultant, find out why the business owner is selling their cannabis license. You will want to inquire about the current lease in place, including rates and terms and identify where the areas of opportunity for growth of the business might be. Ask for copies of the approved license and verify municipal approval.
Gather & Analyze Financial Statements
Have an accountant examine the business’s financial statements and learn about the historic financial activity of the business. A best practice is to obtain 3 years of history, if possible. Some stores are so new, they may not have several years of financial records. That’s fine but try to get as much financial data as possible to conduct due diligence before buying a cannabis license or store. You will want to know 1) if it is profitable, 2) what are fixed and variable expenses, and 3) if it has outstanding debt and how much, including taxes owing.
Understand Cannabis Licensing & Requirements
Before you buy a cannabis license, read about retail cannabis licensing steps, fees, terms and conditions and required documents by visiting the BC government’s Cannabis Retail Store Licensing portal.
Buy a Cannabis License. Thrive Makes it Easier than You Think!
Rebecca Hardin, lead retail cannabis store consultant at Thrive Liquor & Cannabis Advisors, has helped facilitate numerous BC cannabis store sales. Whether you want to sell or buy a cannabis license or need expert help with a cannabis license application, you’ll see why Thrive is BC’s go-to liquor and cannabis consultant.