Green Rush on the East Coast

The California Gold Rush was a period of mass migration and economic boom that began in January 1848, when gold was discovered at Sutter’s Mill in Coloma, California. This discovery led to a rush of prospectors, some 300,000 people, from across the United States and abroad flocking to California in hopes of striking it rich.

2021 marked the beginning of the Green Rush on the East Coast. As the 49ers ventured to California in search of new wealth in 1848, the East Coast, particularly New Jersey and New York, is being flooded with MSOs, Family Offices, wealthy investors and other buyers seeking to capitalize on the short supply of licenses and locations that are available to establish thriving cannabis businesses.

The cannabis industry in New Jersey and New York has seen significant growth and interest, especially following the legalization of recreational cannabis. This has spurred activity in terms of business acquisitions and investments.

Here are some trends and factors contributing to the flood of cannabis prospectors into New York and New Jersey:

Increased Interest in Acquisitions

  1. Legalization and Market Growth:

New Jersey: New Jersey legalized recreational cannabis in November 2020, with sales starting in April 2022. This legalization has expanded the market significantly, attracting investors and entrepreneurs into the space. With a finite amount of locations and local approvals available, the competition to find the right location to exploit a new market is still in full force.

New York: The cannabis industry in New York has been evolving rapidly since the state legalized recreational marijuana in March 2021. Buyers in this sector are driven by several factors, including the potential for high profits, the expansion of market share, and the consolidation of resources, notwithstanding some questionable decisions by the legislature this emerging market is attracting a lot of attention notwithstanding regulatory challenges.

  1. Market Dynamics:

Strategic Consolidations: Larger multi-state operators (MSOs) and local cannabis companies are acquiring smaller businesses to consolidate their market position, increase operational efficiencies, and expand their footprint. Whether it is via an MSA, or through strategic partnerships, smaller operators are still selling their companies for a reasonable profit and the potential for growth remains substantial.

Competitive Landscape: With more players entering the market, there’s a competitive push for acquiring locations with licenses, established businesses that already have the necessary infrastructure and customer base, and late entrants to the market that are soliciting local townships for approval. With limited approvals and uncertain local and regional legislative decisions, these markets present enough risk that only the most well capitalized buyers are able to enter into the market.

Key Factors That Buyers are Considering Regarding Acquisitions

Knowing why there is an increased interest, it’s important to understand the key factors that buyers consider. The following are several factors that influence the choice of a buyer when acquiring another business in the New Jersey and New York markets:

  1. Licensing and Compliance: They will confirm that the business has obtained the necessary licenses and adheres strictly to state regulations. Any legal issues or non-compliance could pose significant risks and are avoided.
  1. Location: They consider the location’s demographics, proximity to customers, accessibility, and local regulations. Municipalities may have different rules regarding cannabis businesses, so understanding these nuances is crucial for a seller as well as the buyer.
  1. Financial Health: If this is an operating business, they will of course review the financial statements and performance of the business. They will look at revenue, expenses, profitability, and potential for growth. Factor in the initial investment and ongoing costs.
  1. Market Demand: They will assess the demand for cannabis products in that specific area. They will consider market trends, consumer preferences, and competition from other dispensaries. This demand can be influenced by the number of dispensaries in a specific city, as an example, Atlantic City has a large concentration of dispensaries in a limited area.
  1. Expansion Potential: Buyers are now considering the potential for expansion or diversification of services. Some businesses might have opportunities to expand their offerings beyond just retail sales.

Summing It Up

The Green Rush is in full swing and cannabis business brokers are busy in New Jersey and New York. As with any emerging market, the best opportunities don’t stay on the market for long.

Knowing what buyers are looking for, if you are a seller, contact a business broker that knows how to market your business in the best way possible. If you’re a buyer, be certain to hire an expert that can direct you to the right opportunity.

Prospectors are rushing to New Jersey and New York, be certain to get in on this rush while golden opportunities still await.

To View Nationwide Listings For Sale please Visit greenlifebusiness.com. To get further information on a business or get an evaluation for your business call Green Life Business Group at 619-653-0483 or email at sales@glbgroupinc.com.

 

2024, June 3rd. Green Rush on the East Coast. Benzinga

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