Investing

Investment Checklist: Before You Invest in Cannabis

Verify the license before anything else

The license is the asset. Confirm it is active, in good standing, actually held by the entity you are investing in, and transferable or survivable under the state's ownership-change rules — because your investment may itself trigger a disclosure or approval process. Investors regularly discover after funding that their ownership stake required state approval they never sought.

Read the tax history like a buyer

Prior-year 280E positions are inherited exposure: aggressive or undocumented cost allocations are a contingent liability that follows the entity, and it appears on no balance sheet. Ask for the returns, ask for the allocation methodology, ask what documentation supports it. Silence on any of those questions is itself an answer.

Test the margins someone is selling you

Cannabis pitch decks routinely show pre-280E margins in a post-280E world, and price-compression assumptions that no mature market has ever honored. Rebuild the model with the real tax line and falling wholesale prices before believing any return projection. We run this diligence for investors professionally — the checklist above is the short version of what a real review covers.

This article is general information, not tax advice.