If you think it’s hard to make a profit by selling cannabis, it’s equally hard to make a profit selling a cannabis business. Valuations for West Coast cannabis properties have dropped tremendously, according to Green Life Business CEO Drew Mathews.
Mathews said one store he’s selling would have sold for $2 million last year, but now it’s listed for only $500,000. Another business he recently had a hand in selling went for less than $4 million, despite generating $10 million in annual revenue, according to Green Life’s website.
A key factor in the valuation decline, according to Mathews, is that the California market is shifting away from basing valuations on top-line revenue to EBITDA (earnings before interest, taxes, depreciation and amortization) and net income. In other words, buyers are less likely to be interested in the gross sales of a dispensary and more focused on whether it is profitable. Mathews said that 40-50% of his buyers no longer even ask what the top-line revenue is for a store.
Read more
https://www.greenmarketreport.com/million-dollar-dispensaries-could-soon-be-worthless/
