Most Michigan Cannabis Owners Have No Intention to Sell Their Businesses

October 30, 2023 · Green Market Report

Despite the challenges in the Michigan market, cannabis operators are preparing to expand.

The 2023 Michigan Cannabis CFO Outlook found that a quarter of cannabis companies in the state were actively seeking capital for expansion at this time, while nearly half said they plan to look for capital within the next 12 months.

The data, analyzed by A&K Research for use by Rehman Business Consulting, represented cannabis companies with revenue ranging from $5 million to more than $100 million. Nearly half – 47% – of the participants said they were vertically integrated.

The companies surveyed also said they believe that the average annual revenue per cannabis store in Michigan is between $1 million and $3 million.

Not for Sale

The report also noted that the heady days of mergers may be over, as only 22% said they were likely to close on an acquisition in the next year. Companies that said they would not or were not likely to close an acquisition in the next 12 months accounts for 61% of the respondents.

Nearly one-third of CFOs surveyed – 66% – said they had no intention of selling their business. Only 17% said they were in the process of getting out and another 17% said they were thinking of selling.

Those considering selling also lowered their expectations of the ticket price for a company. Back in 2022, 44% of respondents thought they could get between 4x-5x EBITDA. Fast forward to 2023, and more than 50% have dropped that number to 2X-4x.

Tax Time

While 280E gets bounced around Washington D.C., Michigan cannabis operators say that they are paying an effective tax rate of 41% or more in 2023. What seemed unusual about those surveyed is that 53% said they weren’t using any state or local tax exemptions.

Interest rates for cannabis companies ranged from good to bad. A lucky 18% reported having no debt, and 24% said their interest rate on debt was less than 7%.  However, 18% reported rates of 10-12% and 24% are getting dinged with rates of 16% or more.

Employee Perks

Owners also have no desire to share the wealth with their employees. A majority of the companies (71%) are not rewarding employees with equity grants.

Less than half cover at least half of the health care costs for their employees.

These Michiganders are a positive bunch. Almost half of this group expects prices to stabilize in the next one to three years. However, 32% threw in the towel and said they have no idea when prices will stabilize. (Full Story)

In category:Business
Next Post

Missouri regulators lift recall on nearly 15,000 marijuana products

Missouri regulators have notified cannabis operators that thousands of marijuana products under recall since August have been released for sale. The roller-coaster situation was first detailed by MJBizDaily. The Department of Health and Senior Services’ Division of Cannabis Regulation (DCR) have released nearly 15,000…
Previous Post

Capital Markets Are Down but Not Quite Dead

A potent concoction of slowing capital markets and inactivity in Washington D.C. bears the majority of blame for the industry’s lackluster fundraising performance in 2023, but poor growth and contracting margins are what’s really been keeping investors away. According to…
Random Post

‘God Almighty,’ No One Should Be In Prison Over Marijuana Possession, Biden Says At Congressional Black Caucus Event

President Joe Biden is again touting his mass marijuana pardon from last year, referencing the act of clemency at a Congressional Black Caucus Foundation awards ceremony. “I’m keeping my promise that no one—no one—should be in jail merely for the…
Random Post

Blink-182's Drummer Travis Barker Releases Mini Barkies Prerolls As Part of His New Cannabis Brand

Like many celebs, Travis Barker has made the transition from CBD to THC with his new start-up. The Blink-182 drummer is launching Barker Canna Co. just three years after he announced Barker Wellness. While the latter focused on CBD, his new venture…
Random Post

Two-thirds of California cannabis labs can’t test flower after rule change

Fewer than one-third of California’s 37 licensed cannabis testing laboratories began the new year permitted to test marijuana flower and non-infused pre-rolls, state regulators told MJBizDaily. That’s because only 12 labs are currently compliant with a recent state law imposing standardized…
Random Post

Florida AG argues adult-use marijuana ballot measure violates state Constitution

Florida Attorney General Ashley Moody filed a petition with the Supreme Court of Florida this week, arguing that the Adult Personal Use of Marijuana ballot initiative is unconstitutional. Text of the proposed constitutional amendment must be approved by the state…